OFFICE  METHODS 
AND  ACCOUNTING 


OFFICE  METHODS 

AND 
ACCOUNTING 


ORGANIZING  YOUR  OFFICE 

LAYING  OUT  AN  ACCOUNTING  SYSTEM 

HANDLING  CORRESPONDENCE 

AND  OFFICE  WORK 


A.  W.  SHAW  COMPANY 

CHICAGO  NEW  YORK 

LONDON 


Copyright.  1914,  by 
A.  W.  Shaw  Company 

Copyright,  Canada,  1914,  by 
A.  W.  Shaw  Company 

Entered  at  Stationers'  Hall,  London 
A.  W.  Shaw  Company,  Ltd. 

Under  the  title 
3*THE  LIBRARY  OF  BUSINESS  PRACTICE"— YoL  S 

Reprinted  1917 
Priated  in  U.  S.  A. 


CONTENTS 


I— ORGANIZING  YOUR  OFFICE 

Editorial  by  Theodore  N.  Vail 7 

I    OFFICE  FUNCTIONS  AND  DEPARTMENTS       ...  9 

by  William  E.  Wilson,  Consulting  Accountant 

II    ARRANGING  THE  OFFICE  TOR  EFFECTIVE  WORK  .         .  22 

By  Wesley  A.  Stanerer,  formerly  Sales  Manager,  Royal 
Typewriter  Company,  Chicago  Branca 

III  CONTROL  AND  MANAGEMENT 33 

By  Charles  E.  Cake 

IV  MACHINES  INSTEAD  OF  CLERKS          •         •         •         •          39 

By  Kendall  Banning 

V    THE  BUSINESS  MAN'S  DESK     •         •         •         •         •          50 
By  Edward  Mott  Woolley 

II— LAYING  OUT  AN  ACCOUNTING 
SYSTEM 

Sditorial  by  James  B.  Logan          ..••••  59 

VI    MAKING  THE  ACCOUNTING  ROOM  CONVENIENT  .         .          61 

By  Wesley  A.  Stinger,  formerly  Sales  Manager.  Royal* 
Typewriter  Company,  Chicago  Branch 

VII    THE  BOOKS  AND  THEIR  ACCOUNTS    ....  70 

By  Neil  M.  Clark 
VIII    How  TO  HANDLE  PURCHASE  ACCOUNTS      ...  85 

By  J.  M.  Cobb 
IX    How  TO  HANDLE  SALES  ACCOUNTS    ...»  95 

By  William  E.  Wilson,  Consulting1  Accountant 

X    REPORTS  THAT  GUIDE  THE  BUSINESS         .        .         .        102 
By  J.  M.  Cobb 

III— TESTED  SYSTEMS  FOR  KEEPING 
ACCOUNTS 

Editorial  by  A.  C.  Bartlett  ......          Ill 

XI    RETAIL  ACCOUNTING         ••••••        113 

By  J.  F.  Wenzel 

XII    BRANCH  STORE  ACCOUNTS        •        •        •        •        •        123 

By  C.  A.  Ransom 


4.i 


CONTENTS 


XIII  MANUFACTURING  AND  SALES  OFFICE  ACCOUNTS        .         130 

By  Neil  M.  Clark 

XIV  SIMPLICITY  IN  BANK  RECORDS       .  •         138> 

By  J.  M.  Cobb 

XV    PERSONAL  AND  PROFESSIONAL  ACCOUNTS         .         .         145 
By  Ernest  A.  Scholz 


IV— HANDLING  CORRESPONDENCE  AND 
OFFICE  WORK 

Editorial  bv  D.  P.  Kingsley 151 

XVI    CORRESPONDENCE  DETAILS  AND  FILING  SYSTEMS      .  153 
By  William  E.  Wilson,  Consulting  Accountant 

XVII    GETTING  OUT  THE  MAIL 167 

By  Edward  Mott  Woolley 

XVIII    CORRECT  ROUTINE  FOR  THE  SALES  ORDER       .         .  177 
By  William  E.  Wilson,  Consulting  Accountant 

XIX  KEEPING  RECORD  OF  GOODS  RECEIVED  AND  SHIPPED  184 

By  Charles  E.  Cake 

XX    OFFICE  SHORT  CUTS  AND  ECONOMIES      .          .        .,  193 
By  Wesley  A.  Stanger,  formerly  Sales  Manager,  Royal 
Typewriter  Company,  Chicago  Branch 

SPECIAL  ILLUSTRATIONS 

I      OFFICE  FUNCTIONS  AND  DEPARTMENTS             .             .             .  11 

II      A  CONVENIENT  OFFICE  LAYOUT                              ,             .             .  25 

III  PLANNING   A  SMALL  OFFICE 27 

IV  THROUGH   ROUTING  IN  OFFICE  WORK  .  29 
V      MAKING   YOUR   OFFICE  IMPRESS   VISITORS       .             .             ,  31 

VI      CONVENIENCE  IN  THE  ACCOUNTING  ROOM  63 

VII      ACCOUNTING  ROOM   LAYOUT  TO  SECURE  PRIVACY  ,             .  64 

VIII      CENTRALIZATION  IN  THE  ACCOUNTING  ROOM            .             .  65 

IX      ACCESSIBILITY  IN  THE  ACCOUNTING  ROOM    ...  66 

X      CENTERING   ACCOUNTING   WORK  AROUND   ONE  MAN            .  67 

XI      THROUGH  ROUTING  IN  ACCOUNTING   WORK  .                          .  68 

XII      THE   FUNCTIONS  OF  BOOKKEEPING           ....  75 

XIII  HOW  ACCOUNTS  PROGRESS  THROUGH   THE   BOOKS                 .  79 

XIV  HANDLING  PURCHASE  ACCOUNTS                ....  89 
XV      HANDLING  SALES   AND   FINANCIAL  ACCOUNTS             .             .  98 

XVI      CORRESPONDENCE   DEPARTMENT   WORK               .                          .  155 

XVII      HANDLING   INCOMING  MAIL 159 

XVIII      THE  FILING  ROOM   "SORTER" 161 

XIX      HANDLING   THE  SALES   ORDEB        .....  179 

XX  TRAFFIC   AND   SHIPPING   DEPARTMENT   WORK  186 


PART  I— ORGANIZING 
YOUR  OFFICE 

Making  Work  Profitable 

INTELLIGENCE  alone,  in  the  direction  of 
labor,  makes  it  profitable,  dignified  or  noble. 
That  intelligence  which  directs  it  may  be  either 
your  own  or  that  of  others ;  to  the  extent  that  it  is 
yours,  you  will  get  the  full  value  that  is  produced 
by  both  your  labor  and  your  intelligence.  To  the 
extent  that  it  is  the  intelligence  of  others  which 
directs  your  labor,  you  must  share  with  the  others 
the  value  of  what  is  produced. 

Do  not  confound  labor  directed  by  intelligence 
with  expert  or  skilled  labor,  which  may  be  per- 
formed in  a  wasteful,  unintelligent  and  perfunc- 
tory way.  Expert  or  skilled  labor,  when  working 
on  the  separate  units  of  a  large  structure,  or  on  a 
large  organization,  must  be  directed  by  a  super- 
vising intelligence,  in  order  that  the  separate 
units  may  be  brought  each  into  its  proper  place, 
with  as  little  indirection  or  loss  of  effort  as  possible. 

Intelligent  labor,  or  intelligent  direction  or  or- 
ganization of  labor,  is  that  which  enables  you  or 
others  to  produce  greater  results  with  less  or  at 
least  the  same  amount  of  labor. 


THEODORE  N.  VAIL 

President,  American  Telephone  and  Telegraph    Company 
President,  The  Western  Union  Telegraph  Company 


OFFICE  FUNCTIONS  AND 
DEPARTMENTS 

By  William  E.  Wilson 
Consulting  Accountant 

WHATEVER  your  business,  your  office  forms  a 
unified  division,  independent  of  the  other  divi- 
sions and  yet  working  in  close  relation  with  them  be- 
cause it  handles  their  transactions.  Its  organization 
must  be  such  as  to  promote  the  greatest  accuracy  and 
dispatch  in  the  operation.  Yet  this  very  unity  and  in- 
dependence of  organization  is  hard  to  attain  and  must 
be  constantly  watched  because  the  work  of  the  office  so 
frequently  overlaps  the  activities  of  both  the  production 
and  sales  departments. 

The  first  thought  that  arises  in  connection  with  any 
organization  is  that  it  must  have  a  controlling  head  over 
the  work  and  the  workers  within  its  jurisdiction.  Such 
a  head  the  office  has,  usually  called  the  office  manager. 
He  is  the  employer  of  all  the  office  labor,  has  disciplinary 
control  over  it,  and  supervision  of  the  work  done  by  it. 

This  does  not  mean  that  the  office  manager  is  the 
superior  and  "boss"  of  all  the  individuals  within  the 
four  walls  of  the  office.  There  are  certain  officials  whose 
work  necessitates  their  presence  in  the  office  who  are 
nevertheless  either  independent  executives  directly  under 
the  general  manager  and,  therefore,  of  co-ordinate  rank 
with  the  office  manager,  or  who  belong  to  one  of  the 
other  departments  of  the  business.  Thus,  the  purchas- 


10 ORGANIZING    AN    OFFICE 

ing  agent  usually  has  a  desk  in  the  office  and  his  clerks 
are  under  the  disciplinary  control  of  the  office  manager; 
yet  lie  is  more  properly  an  executive  of  the  producing 
end  of  the  business,  and  the  office  manager  has  no  au- 
thority over  him.  Similarly,  the  sales  manager,  while 
occupying  the  office  and  having  his  subordinates  in  the 
office  force,  is  in  charge  of  an  independent  branch  of 
the  business.  The  credit  man,  too,  is  a  part  of  the  office 
and  yet  not  himself  under  the  office  manager,  but  either 
an  independent  executive  under  the  general  manager,  or 
a  part  of  the  sales  department.  The  office  manager  has 
DO  authority  over  these  executives,  but  he  has  general 
control  over  the  clerks  and  subordinate  employees  who 
perform  the  clerical  work  in  connection  with  these  vari- 
ous offices.  Very  frequently  the  head  bookkeeper  in 
direct  charge  of  accounting,  or  the  chief  clerk  in  direct 
charge  of  all  correspondence  and  records,  or  the  credit 
man,  holds  the  position  of  office  manager. 

DIVISIONS  into  which  the  work  of  an  office  is  divid- 
ed— the  duties  and  functions  which  are  ordinarily 
assigned  to  each  of  the  seven  departments. 

Office  work  divides  itself  into  two  general  divisions: 
first,  that  relating  to  accounts,  having  to  do  with  the 
making  of  the  records  of  the  concern 's  transactions ;  and 
second,  that  which  is  purely  mechanical,  recording  or 
clerical,  having  to  do  with  the  mere  forwarding  of  busi- 
ness transactions. 

As  modern  business  has  developed,  this  work  has  come 
to  be  divided  into  seven  principal  parts,  which  become 
sub-departments  of  the  office.  Their  functions  are  as 
follows : 

1.  The  Purchasing  Department— the  handling  of  rec- 
ords attendant  upon  keeping  track  of  quotations,  prices 


WHAT    TO    PLAN    FOR 


11 


FIGURE  I:     This  chart  shows  the  function  of  each  of  ihe  departments  of 

the  cfficz  with  the  lines  of  control  which  bring  details  to  a  focus  at  the 

proprietor  s  desk 


12 ORGANIZING    AN    OFFICE 

and  other  data;  the  making  out  and  following  up  of 
purchase  orders;  the  records  showing  the  receipt  'of 
purchases;  the  stock  record,  and  the  process  of  pay- 
ment for  purchases. 

2.  The  Order  Department — the  entry  and  handling 
of  sales  orders  as  they  are  turned  in  by  the  sales  depart- 
ment or  received  from  customers,   and  all  records  at- 
tendant upon  the  proper  handling  until  the  transaction 
reaches  the  accounting  department. 

3.  The  Sales  Department — the  clerical  work  of  han- 
dling sales  records,  the  follow-up  and  other  data  which  the 
sales  manager  wishes  to  keep  analyzed. 

4.  The    Credits    and    Collections    Department — the 
handling  of  the  order  from  the  standpoint  of  gaining  in- 
formation regarding  the  customer:  recording,  filing  and 
handling  this  information;  bringing  in  money  due. 

5.  The    Accounting    Department — the    handling    of 
money  and  the  records  pertaining  to  it,  the  making  of 
all  original  entries,  the  posting  of  all  accounts,  the  book- 
keeping records   of  all  transactions  with  persons  who 
have  money  relations  with  the  business,  the  care  of  the 
general  ledger,  the  making  out  of  reports  and  statements 
of  business. 

.  6.  Th3  Correspondence  Department — the  opening 
and  distribution  of  incoming  mail,  the  handling  of  cor- 
respondence, the  filing  of  all  letters,  follow-up  work 
attendant  upon  general  correspondence,  the  general 
stenographic,  typewriting  and  filing  work  of  the  office, 
the  handling  of  outgoing  mail,  the  telegraph,  telephone 
and  messenger  service,  and  all  work  pertaining  to  com- 
munication. 

7.  The  Traffic  and  Shipping  Department — the  rec- 
ords and  data  needed  by  the  traffic  manager  and  head 
shipping  clerk  bearing  on  their  work,  and  for  the  rout- 


WHAT    TO    PLAN    FOR 13 

ing  of  shipments  and  adjustment  of  claims. 

Each  of  these  departments  will  be  described  in  full 
under  the  proper  headings.  The  purpose  here  is  to 
show  their  general  functions  and  the  relation  they  hold 
to  each  other. 

At  the  head  of  each  department  of  work  in  the  office 
is  a  manager  for  that  department.  As  in  the  case  of  the 
office  manager,  this  does  not  necessarily  mean  that  each 
official  has  charge  of  one  department  and  one  only. 

DUTIES  of  the  purchasing  department — the  organi- 
zation essential  for  the  proper  keeping  of  stock 
records  and  the  satisfactory  placing  of  orders. 

Very  often  the  purchasing  agent,  for  instance,  com- 
bines with  his  work  the  duties  of  traffic  manager,  or 
the  chief  bookkeeper  is  also  head  of  the  correspondence 
department  and  of  the'  order  department.  The  point  is 
that  every  office  has  these  seven  classifications  into 
which  its  work  is  divided. 

The  chief  duties  of  the  purchasing  agent  are  to  buy 
the  goods  needed  by  the  concern.  The  work  of  the 
purchasing  agent  divides  itself  into  five  departments : 

First,  collection  of  all  data  regarding  quotations, 
prices  and  purchases. 

•Second,  the  making  out  of  the  actual  orders  for  pur- 
chases. 

Third,  the  follow-up  of  these  orders  to  see  that  de- 
liveries are  made  on  time  and  to  take  care  of  whatever 
changes  may  be  demanded  in  the  purchases. 

Fourth,  receiving  goods  and  seeing  that  they  are  cor- 
rect in  quantity  and  quality. 

Fifth,  stockkeeping,  the  handling  of  records  which 
show  the  amount  of  stock  on  hand  at  all  times  and  the 
keeping  up  of  the  stock. 


14 ORGANIZING    AN    OFFICE 

The  well-organized  purchasing  department  has,  in  ad- 
dition to  the  purchasing  agent  as  manager,  an  assistant. 
The  work  of  the  purchasing  agent  is  to  buy — to  keep 
track  of  prices  and  markets  and  to  find  the  right  ma- 
terial at  the  lowest  price.  As  much  of  the  clerical  work 
as  possible  should  be  done  by  his  assistant.  The  purchas- 
ing department  should  also  have  a  clerk  to  gather  and 
keep  records  of  the  various  data  mentioned  under  the 
first  division  of  the  purchasing  work  and  another  clerk 
would  act  as  stockkeeper.  This  is  the  average  and  ideal 
personnel  of  the  purchasing  department.  It  may  be  re- 
stricted to  the  purchasing  agent  and  one  assistant,  or  it 
might  be  expanded  into  a  dozen  assistants  and  a  hundred 
clerks. 

ORDER  and  sales  department  work  in  the  office  falls 
into  the  routine  of  processing  incoming  orders  so 
as  to  effect  prompt  and  efficient  deliveries. 

The  order  department  is  very  often  a  subsidiary  de- 
partment of  the  sales  division  of  the  business,  inasmuch 
as  in  some  organizations  all  the  work  of  entering  the 
order  is  put  upon  the  sales  department  and  from  it  are 
supposed  to  come,  on  the  one  hand,  the  instructions  to 
the  plant  or  warehouse  to  fill  the  order,  and  on  the 
other  the  data  needed  for  making  the  proper  entries  on 
the  books.  The  manager  is  in  charge  of  the  clerical 
force  in  the  department  and  he  is  the  first  to  receive  the 
sales  mail  as  it  is  distributed  in  the  morning.  The  work 
of  this  department  is  to  make  proper  and  complete  entry 
of  the  orders  from  customers,  to  see  that  instructions  go 
to  the  plant  or  warehouse  for  filling  the  orders,  to  the 
shipping  room  for  forwarding,  to  the  accounting  de- 
partment for  entry  on  the  books,  and  to  the  sales  man- 
ager and  credit  man  for  their  records. 


WHAT    TO    PLAN    FOR 15 

The  work  of  this  department  is  divided  into  four 
parts : 

First,  the  interpreting  of  the  order,  which  is  usually 
done  by  the  manager  or  his  assistant. 

Second,  the  entry  of  the  order,  which  is  handled  by 
the  clerks  with  the  proper  appliances. 

Third,  the  distribution  of  the  copies  to  the  proper  de- 
partments of  the  business. 

•Fourth,  the  following  of  the  orders  to  see  that  they 
are  filled  and  the  order  made  ready  for  billing  to  the 
purchaser. 

The  personnel  of  the  department  includes  a  man- 
ager, his  assistant,  who  is  his  understudy  in  case  of  ab- 
sence and  who  also  attends  to  the  work  of  passing  the 
orders,  the  entry  clerks,  the  checking  clerk,  who  checks 
the  orders  against  the  customers'  letters  and  sees  that 
the  copies  get  to  the  proper  departments,  and  the  fol- 
low-up clerk.  Here  again,  the  duties  can  be  so  combined 
that  all  the  work  is  done  by  a  manager  and  one  assistant, 
or  extended  to  a  dozen  executives  and  hundreds  of  entry 
clerks. 

The  clerical  and  recording  work  of  the  sales  depart- 
ment is  so  closely  related  to  the  work  of  the  actual  sell- 
ing that  it  is  difficult  to  describe  the  carrying  on  of 
clerical  work  without  describing  also  the  organization  of 
the  sales  work.  The  clerical  work  of  the  sales  depart- 
ment divides  itself  into  five  parts : 

First,  the  record  of  sales,  which  every  sales  manager 
wishes  to  keep  and  which  he  secures  daily  from  the 
record  of  sales  that  comes  to  him  from  the  order  de- 
partment. 

Second,  the  records  the  sales  manager  keeps  concern- 
ing customers,  their  standing  and  their  purchases  from 
his  house  from  month  to 'month. 


16 ORGANIZING    AN    OFFICE 

Third,  the  records  of  salesmen,  including  both  the 
history  of  the  salesman  and  an  accurate  record  of  his 
sales  for  the  house  and  his  expenses. 

Fourth,  the  handling  of  the  salesman's  expense  ac- 
counts. 

Fifth,  the  handling  of  records  of  the  advertising  de- 
partment, which  include,  first,  the  records  of  returns 
from  keyed  advertisements  in  different  mediums;  and 
second,  the  follow-up  work,  which  takes  up  the  big  sub- 
ject of  the  handling  of  letters  and  the  follow-up.  The 
organization  and  working  methods  of  the  sales  and  ad- 
vertising departments  are  fully  described  in  other  vol- 
umes, and  therefore  need  not  be  further  elaborated  here. 

The  credit  and  collections  department  is  most  often  a 
distinct  department  of  the  office,  although  sometimes  it 
is  looked  upon  as  a  sub-department  of  the  sales  division. 
At  the  head  of  this  department  is  the  credit  manager, 
whose  work  divides  itself  into  four  classes : 

First,  to  approve  or  disapprove  of  all  orders  received. 

Second,  to  gather  complete  information  regarding  cus- 
tomers and  prospects. 

Third,  to  fix  the  terms  of  sale  and  the  limit  of  credit 
for  all  customers  and  sales. 

Fourth,  to  make  collections  from  customers. 

Bearing  on  this  work,  the  credit  manager  has  an  as- 
sistant who  usually  handles  the  routine  of  gathering 
facts,  keeping  up  the  information  files,  and  acting  in  the 
absence  of  the  manager;  a  collection  manager  who  is  in 
direct  charge  of  carrying  on  the  collections ;  stenog- 
raphers for  handling  correspondence  with  customers ;  a 
clerical  force  for  keeping  up  the  records  in  the  in- 
formation files,  and  also  the  records  which  the  credit 
manager  wishes  to  keep  regarding  the  sales  to  customers ; 
and  clerks  in  the  collection  department  to  handle  the 


WHAT    TO    PLAN    FOR 17 

collection  credits  and  collection  follow-up. 

The  accounting  department  is  the  heart  of  the  busi- 
ness organism  because  through  it,  at  one  time  or  an- 
other, must  pass  every  transaction,  from  the  largest  to 
the  smallest,  from  first  to  last,  of  the  whole  business. 
The  function  of  this  department  is  to  handle  work 
classed  as  bookkeeping.  At  the  head  of  the  department 
is  the  chief  accountant,  the  man  responsible  for  the  or- 
ganization of  the  accounting  department,  who  is  in  direct 
charge  of  the  general  ledger. 

"OOOKKEEPING  and  accounting  furnish  the  history 
JtD  of  a  business  and  the  records  on  which  future  de- 
velopments are  based — right  plans  of  organization. 

The  work  of  the  accounting  department  divides  itself 
into  entries  concerning  purchases,  entries  concerning 
sales  and  entries  for  the  controlling  or  financial  accounts 
of  the  business.  It  is,  therefore,  natural  that  in  the  well- 
organized  office,  one  sub-head,  the  purchase  bookkeeper, 
who  is  in  charge  of  the  purchase  ledger,  will  in  turn 
have  under  him  the  purchase  order  and  invoice  clerk  to 
handle  the  invoices  as  they  come  in,  check  them  against 
the  receiving  record,  and  prepare  them  for  proper  entry 
on  the  books;  a  disbursement  clerk  or  cashier,  to  handle 
the  disbursing  of  all  moneys,  whether  by  check  or  cash ; 
a  payroll  clerk,  whose  title  explains  his  work,  and  a 
security  or  auditing  clerk. 

The  sales  bookkeeper  will  likewise  be  in  charge  of  the 
sales  ledger  and  will  have  under  him  an  order  and  sales 
record  clerk  to  attend  to  the  filing  and  checking  of 
orders  as  they  come  in  from  the  sales  department;  a 
cashier  to  attend  to  the  handling  of  the  money;  and  a 
checking  or  auditing  clerk. 

Financial   and   controlling    accounts,   covering   large 


18 ORGANIZING    AN    OFFICE 

items  such  as  real  estate,  depreciation,  stock  and  bond 
issues,  dividends  and  reserve  fund,  which  come  close  to 
the  heart  of  a  business,  are  entered  in  the  general  jour- 
nal. This  book  is  usually  in  charge  of  the  head  book- 
keeper or  of  his  confidential  assistant. 

Modern  business  methods  have  greatly  systematized 
and  simplified  the  work  of  the  accounting  department. 
Many  of  the  complications  and  much  of  the  elaboration 
of  the  old-time  methods  have  been  done  away  with,  mak- 
ing most  of  the  work  of  a  clerical  and  mechanical  char- 
acter, requiring  less  expert  bookkeeping  and  accounting. 
At  the  same  time,  the  results  have  been  made  more  cer- 
tain, the  work  itself  is  more  accurate  and  economy  of 
time  has  been  secured. 

The  accounting  department  is  the  most  likely  of  all 
the  departments  to  vary  in  organization  and  personnel 
in  different  businesses.  Very  often  in  cases  where  the 
cash  business  is  large,  either  from  purchases  or  sales,  the 
purchase  or -sales  bookkeeper  himself  holds  the  title  of 
cashier  and  handles  all  money.  The  head  bookkeeper 
sometimes  holds  the  title  of  cashier  and  attends  to  not 
only  the  general  ledger,  but  the  sales  ledger  also.  What- 
ever line  or  classification  of  duties  the  character  of  the 
business  may  call  for,  however,  these  same  duties  occur 
in  every  business. 

TRANSACTIONS  never  originate  in  the  correspond- 
ence department,  but  its  efficient  control  is  essen- 
tial to  the  smooth  running  of  any  business  machine. 

In  any  transaction,  communications  pass  between  dif- 
ferent employees  in  the  business  and  between  the  house 
itself  and  outside  concerns  or  individuals.  The  handling 
of  all  such  communications  lies  with  the  correspond- 
ence or  communication  department.  This  department  is 


WHAT    TO    PLAN    FOR 19 

yveculiarly  without  initiative  power,  for  its  head,  as  a 
rule,  has  no  control  over  what  letters  shall  be  written,  or 
how  they  shall  be  written.  He  merely  handles  the  me- 
chanical details  of  this  work  of  the  business. 

At  the  head  of  the  correspondence  department  is  a 
manager  whose  work  covers  eight  divisions : 

First,  the  handling  of  incoming  mail.  This  is  in 
charge  of  the  incoming  mail  clerk,  who  has  various 
clerks  helping  him  in  the  opening  of  the  mail,  in  its 
classification  and  distribution  to  the  various  departments 
and  individuals  in  the  business,  and  in  making  the  rec- 
ords, which  will  be  described  in  connection  with  mail 
opening. 

Second,  the  filing  of  all  correspondence,  including  the 
letters  received  and  carbon  copies  of  letters  sent  out. 

Third,  the  handling  of  the  follow-up  on  correspond- 
ence for  the  different  departments  of  the  office. 

Fourth,  the  general  filing  for  all  departments  of  the 
office,  including  such  items  as  contracts,  receipts,  copies 
of  orders,  and  other  records.  All  this  filing  and  follow- 
up  work  is  usually  put  in  charge  of  a  head  filing  clerk, 
who  is  directly  under  the  manager  of  the  department  in 
charge  of  the  filing  clerks. 

Fifth,  the  handling  of  the  stenographic  and  type- 
writing force  used  in  the  office.  This  work  is  usually 
in  immediate  charge  of  the  head  stenographer. 

Sixth,  the  gathering  and  sending  of  outgoing  mail,,  in 
charge  of  the  outgoing  mail  clerk,  who  has  assistance  in 
proportion  to  the  volume  of  work. 

Seventh,  telegraph  and  telephone  service,  which  is  usu- 
ally put  in  charge  of  the  telephone  operator. 

Eighth,  the  messenger  service,  consisting  of  the  proper 
interhouse  messengers  and  also  the  messenger  boys  who 
carry  communications  outside.  These  are  usually  in 


20 ORGANIZING    AN    OFFICE 

charge  of  the  information  clerk  (frequently  the  tele- 
phone operator),  who  has  a  desk  at  the  entrance  of  the 
office  and  meets  all  its  visitors. 

The  traffic  department  dictates  the  routing  of  all  ship- 
ments, makes  arrangements  with  the  transportation  lines 
for  rates  and  services  and  handles  all  claims  against  the 
transportation  companies.  Sometimes,  though  not  al- 
ways, the  shipping  department  is  a  sub-department  of 
the  traffic  department. 

At  the  head  of  this  work  is  the  traffic  manager.  In  a 
concern  of  average  size,  he  has  an  assistant  who  per- 
forms the  work  of  routing  and  of  handling  the  records, 
a  claim  clerk  who  handles  the  records  of  claims,  and  a 
head  shipping  clerk,  to  take  charge  of  shipments. 

A  DDITIONAL  functions  in  the  routine  of  office 
•*V  work  fall  upon  special  executives — definite  divi- 
sion of  duties  places  the  responsibility  for  mistakes. 

The  office  organization  here  described,  with  its  de- 
partments and  managers  and  working  personnel,  is  com- 
petent to  carry  on  the  commercial  and  clerical  transac- 
tions of  any  business.  But  there  are  certain  general  and 
advisory  work  to  be  done  and  certain  officials  necessary 
to  complete  the  organization. 

One  of  these  is  the  controller.  His  duties  may  be  as- 
sumed by  the  office  manager,  the  chief  clerk,  the  treas- 
urer or  any  executive.  He  has  absolute  power  over  dis- 
bursements, which  he  uses  as  a  safety  check  upon  the 
purchasing  department.  All  purchase  orders  pass  over 
his  desk  for  approval  before  they  are  sent  to  the  pur- 
chasee,  and  he  can  change  or  cancel  them  or  get  further 
information  regarding  them  at  his  discretion.  His 
prime  duty  is  to  protect  the  funds  of  the  business,  to 
act  as  a  watchman  over  its  finances,  and  therefore  upon 


WHAT    TO    PLAN    FOR 21 

him  rests  the  responsibility  for  seeing  that  the  business 
is  in  good  financial  condition  and  has  the  cash  on  hand 
for  its  transactions.  His  power  extends  even  further 
than  a  check  on  the  purchasing  agent.  He  is  a  check 
upon  the  plant  superintendent  and,  in  fact,  upon  the 
whole  business  organization ;  and  he  is  responsible  to  the 
board  of  directors  alone.  If  the  credit  man  is  taking  out 
a  larger  total  of  accounts  than  the  house  can  safely  carry 
or  is  extending  terms  that  are  longer  than  the  finances 
of  the  house  will  allow,  the  controller  can  limit  him. 

In  addition  to  the  controller,  many  organizations  in- 
clude an  auditor,  whose  duty  is  to  examine  the  records 
of  the  accounting  department  and  report  to  the  president 
and  directors  regarding  their  condition.  This  function 
is  sometimes  performed  by  the  controller  and  sometimes 
the  head  accountant  is  called  the  auditor,  although  rank- 
ing with  the  rest  of  the  heads  of  departments  and  sub- 
ordinate to  the  controller. 

Neglect  to  make  someone  in  your  business  definitely 
responsible  for  each  of  these  various  duties  is  to  invite 
error  or  loss.  Knowing  these  tested  lines  of  organiza- 
tion, the  chief  in  his  office-planning  and  the  department 
head  in  his  place  can  make  sure  that  all  essentials  of  the 
work  are  in  hand  and  can  adapt  this  tested  arrangement 
of  functions  to  any  peculiar  need  of  store,  factory  or 
professional  business. 


TJJ  AVE  a  well-considered  system  of  doing  things,  definite  and 
*^  business-like  in  all  departments,  not  an  imitation  of 
something  else,  but  one  designed  for  your  own  use. 

— John  Calder 

President,  International  Motor  Company 


II 


ARRANGING  THE  OFFICE  FOR 
EFFECTIVE  WORK 

By  Wesley  A.  Stanger 
Formerly  Sales  Manager,  Royal  Typewriter  Company,  Chicago  Branch 

LOST  motions  in  the  sales  office  were  recently  found 
to  be  devouring  the  profits  of  a  well-organized 
factory.  The  manufacturer  was  confronted  with  what 
seemed  to  be  an  impossible  condition :  the  difference  be- 
tween the  manufacturing  cost  and  the  selling  price  of 
each  unit  of  product  was  400  per  cent,  yet  he  was  not 
making  money.  He  had  to  borrow  to  keep  going. 

The  manufacturing  cost  was  known  to  a  nicety.  He 
could  not  reduce  the  quality  of  raw  material,  cut  the 
pay  roll  or  reduce  the  number  of  evolutions  necessary  to 
turn  out  his  product.  He  had  had  the  not  unusual  ex- 
perience with  unproductive  salesmen,  but  this  factor  of 
his  costs  was  not  abnormal.  He  could  cut  down  some- 
what on  the  selling  expense,  but  saw  no  other  place  for 
economy. 

Finally  he  turned  his  attention  to  the  office.  Here  he 
soon  discovered  that  it  cost  more  to  bill,  charge  and 
collect  on  each  device  than  to  advertise  it,  and  consider- 
ably more  than  to  manufacture  it.  Here  was  the  leak ; 
he  was  using  an  antiquated  and  laborious  system.  Call- 
ing in  an  expert,  he  learned  that  lost  motion  and  double 
steps  kept  several  employees  busy  doing  what  would  have 
been  simple  for  one  to  do  under  correct  arrangements. 

When  the  expert  was  through,  the  manufacturer  oo- 


PLANS    AND    LAYOUT 23 

cupied  a  smaller  office.  His  rent  was  reduced.  He  had 
installed  new  systems  but  they  were  paying  for  them- 
selves out  of  the  saving  in  rent.  His  pay  roll  was  less 
than  formerly  and  his  office  was  so  arranged  that  every- 
thing worked  with  the  same  precision  as  in  his  factory. 
From  that  day  he  made  profits  instead  of  deficits. 

T71ACTORS  and  principles  which  help  to  make  the 
A  arrangement  of  the  office  effective — working  plans 
in  which  all  space  is  used  to  the  best  advantage. 

The  need  for  care  in  laying  out  your  office  is  at  least 
as  great  as  in  laying  out  your  factory.  It  is  not  always 
possible  to  have  free  choice  in  the  location  of  the  office. 
Relations  to  a  particular  business  district  or  to  a  factory 
may  preclude  this ;  but  whether  one  is  free  to  choose  the 
building  best  suited  for  his  needs,  or  must  fit  in  with  the 
factory  plant,  he  should  as  far  as  possible  observe  the 
following  essentials  of  effective  office  arrangement : 

1.  Light,' ventilation  and  quiet. 

2.  Accessibility. 

3.  Privacy. 

4.  Cooperation  of  occupants. 

5.  Continuity  of  operation. 

6.  Business  impression  produced  upon  visitors. 
Light  and  ventilation  are  the  prime  factors  in   de- 
termining the  efficiency  of  employees.    Their  presence  is 
absolutely  necessary  for  accurate  and  capable  work.   The 
office,  too,  should  be  as  far  from  outside  noises  as  pos- 
sible.    The  tumult  of  street  cars  and  elevated  trains, 
heavy  wagons  rattling  over  the  pavements,  automobile 
horns,    policemen's    whistles — these    and    the    thousand 
other  noises  that  go  to  make  up  the  confusion  of  a  busy 
street,  distract  the  thoughts  and  wear  down  the  strength 
of  even  the  most  energetic  in  the  course  of  a  long  day. 


24 ORGANIZING    AN    OFFICE 

In  a  business  district  these  distractions  can  best  be 
avoided  by  renting  space  in  a  high  building,  where  the 
office  is  well  removed  from  the  street.  In  such  an  office, 
also,  light  and  air  are  not  excluded  by  the  surroundings. 
A  factory  office  should  be  in  a  detached  building  if  pos- 
sible, or  at  least  far  away  from  the  heaviest  machinery. 

In  most  offices  the  arrangement  of  furniture  seems 
largely  a  matter  of  chance.  Desks,  typewriters,  benches, 
filing  cabinets,  are  all  huddled  against  the  four  retain- 
ing walls,  and  the  middle  space  is  left  vacant.  But  va- 
cant space,  at  $1.50  per  square  foot  a  year,  is  not  a  pro- 
ducing factor.  In  plotting  a  room,  the  desks  should  be 
arranged  in  the  center,  where  access  is  free  from  all 
sides.  Wall  space  is  better  for  filing  cases  which  need 
to  be  approached  only  from  one  side.  A  neat  alignment 
of  desks  in  rows  with  regular  aisles  secures  the  greatest 
economy  of  space  with  an  appearance  of  order  that  is 
effective  for  business  atmosphere. 

Use  partitions  sparingly,  if  at  all;  even  railings  im- 
pede the  free  movement  of  an  office  force.  The  space 
which  they  take  up  and  the  necessary  aisles  on  each  side, 
can  be  used  more  profitably.  Every  swinging  door  or 
gate  takes  up  nine  square  feet  of  space.  Without  par- 
titions the  entire  force  is  at  once  brought  under  the 
eyes  of  the  office  manager. 

Where  partitions  must  be  used,  they  should  be  made 
as  low  as  possible,  so  as  not  to  interfere  with  proper 
ventilation.  Panel  partitions  are  the  most  desirable  for 
private  offices.  These  consist  of  interlocking  sections 
about  thirty  inches  wide  by  seven  feet  high,  the  upper 
portion  being  of  clear  or  ground  glass  to  permit  the  free 
passage  of  light.  The  space  above  these  partitions  al- 
lows the  air  to  circulate  through  the  entire  room  with- 
out hindrance.  In  a  factory  office,  where  heavier  con- 


__ PLANS    AND    LAYOUT 25 

struction  is  desirable,  the  partitions  may  be  made  of  ex- 
panded metal  lath,  erected  on  three-quarter  inch  chan- 
nel iron,  plastered  on  both  sides. 


FIGURE  II:     This  office  layout  is  planned  to  secure  the  greatest  accessi- 
bility for  the  public  and  the  highest  cooperation  between  departments. 
Clear  glass  partitions  secure  privacy  urithout  shutting  off  the  light 

The  location  of  stenographers'  desks  is  a  problem  in 
every  large  office,  and  its  solution  is  largely  a  matter  of 
the  special  requirements  of  your  business.  Whether  it 
is  better  to  assemble  the  stenographers  in  a  central  room 
and  assign  them  individual  tasks  as  they  become  avail- 
able, or  to  distribute  them  about  the  office,  each  corre- 
spondent and  department  head  having  his  own  stenog- 
rapher, is  a  question  the  answer  to  which  depends  largely 
on  the  character  of  the  business  and  the  conditions  under 
which  correspondence  must  be  handled.  One  man  with 
constant  detail  to  handle  wants  his  stenographer  close 
to  his  desk,  acting  somewhat  as  a  private  secretary,  while 
another  wishes  the  typewriting  done  out  of  his  hearing. 

The  principles  on  which  your  decision  will  hinge  are : 
frequency  of  your  dictation  calls,  number  of  executives 


26 ORGANIZING    AN    OFFICE 

served  by  the  stenographer  and  working  conditions  mosi 
favorable  to  each,  convenience  of  typing  room  to  the 
business  desks,  diligence  and  control  of  the  stenographic 
force. 

For  every  business,  the  arrangement  of  the  office  is  of 
prime  importance,  and  a  man  should  know  the  principles 
of  good  arrangement  and  apply  them  as  far  as  possible 
to  his  own  business.  The  relations  between  departments 
and  officials  will,  to  a  great  extent,  influence  the  loca- 
tion of  their  work.  But  the  placing  of  one  department 
or  executive  must  not  interfere  with  the  proper  distri- 
bution of  light  and  air  to  other  departments  and  em- 
ployees. 

Every  office  needs  a  lobby  or  reception  room.  The 
'place  for  this  is  just  inside  the  main  entrance.  In 
offices  where  visitors  are  not  often  required  to  wait,  this 
may  be  reduced  to  room  enough  for  the  desk  of  the  in- 
formation clerk,  who  is  often  the  telephone  operator. 
Near  the  main  entrance  and  opening  on  the  reception 
room,  if  there  is  one,  should  be  the  offices  of  the  men 
who  are  most  likely  to  receive  callers. 

LOCATION  of  each  department  and  executive  should 
bear  a  close  relation  to  the  kind  of  .work  performed 
and  the  connection  with  the  rest  of  the  business. 

Some  executives  make  themselves  as  inaccessible  as 
possible,  establishing  their  offices  at  a  distance  from  the 
entrance  and  hedging  themselves  about  with  secretaries 
and  stenographers.  The  ideal  place  for  the  executive, 
however,  is  near  the  main  entrance,  and  a  tactful  clerk 
may  guard  him  there  against  intrusion  as  effectively  as 
though  he  were  in  the  farthest  corner  of  the  establish- 
ment. 

The  officials  who  by  virtue  of  their  work  come  most 


PLANS    AND    LAYOUT 


in  contact  with  the  public,  are  the  purchasing  agent,  the 
cashier,  the  credit  manager  and  the  sales  manager.  The 
shipping  and  receiving  clerks,  on  the  other  hand,  are 
generally  located  near  a  rear  entrance  or  a  freight  ele- 


FIGURE  III:    A  real  estate  dealer  planned  the  above  layout  to  use  every 

inch  of  space  in  a  small  room.     The  arrangement  is  compact,  but  the  three 

offices  and  reception  room  meet  every  need 

vator,  so  that  their  work  need  not  obstruct  the  reception 
room. 

Your  order  and  entry  departments  should  be  near  to- 


28 ORGANIZING    AN    OFFICE 

gether,  not  far  from  the  incoming  mail  clerk  and  close 
to  the  files  of  the  order  department.  The  bookkeepers 
should  be  near  the  cashier,  the  billing  clerks  near  the 
bookkeepers,  the  order  clerks  near  the  billing  clerks.  In 
the  accounting  room,  the  purchase  bookkeeper  should  be 
accessible  to  the  purchasing  agent  and  his  invoice  clerk, 
the  sales  bookkeeper  to  the  sales  manager  and  the  credit 
manager.  The  stores  department  must  be  in  close  touch 
with  the  purchasing  department  to  avoid  duplication  of 
records,  and  the  disbursing  clerk  near  the  stores  depart- 
ment. The  timekeeping  and  employment  bureaus  are 
closely  allied  with  the  cashier's  office  and  can  with  ad- 
vantage be  located  near  it. 

How  all  these  factors  are  combined  in  a  scientifically 
arranged  office,  planned  to  get  the  most  out  of  the  floor 
space,  and  at  the  same  time  afford  the  greatest  acces- 
sibility to  the  public,  the  highest  development  of  co- 
operation between  departments,  and  the  best  distribution 
of  light,  is  illustrated  in  Figure  II.  The  entrance  to  the 
suite  is  at  the  extreme  end  of  the  hall,  where  the  ante- 
room is  located ;  at  the  right  is  the  general  office,  and  on 
the  left  are  the  private  offices,  all  of  which  have  outside 
corridors. 

Glass  partitions  separate  the  offices  from  the  corridors 
so  that  there  is  no  lack  of  light  in  any  part  of  the  suite. 
Ventilation  is  easily  secured  by  use  of  the  windows  and 
transoms.  Secrecy  may  be  maintained  in  any  of  the 
private  offices  by  closing  the  doors,  yet  without  shutting 
out  the  light  from  any  other  section  of  the  office. 

How  these  principles  can  be  enforced  in  the  arrange- 
ment of  the  small  store  or  shop  office  is  shown  by  the 
experience  of  two  men  who  started  as  partners  in  the 
real  estate  business  in  a  suburban  town.  They  found 
that  the  best  location  they  could  secure  was  a  very  small 


PLANS    AND    LAYOUT 


store  room  near  the  railroad  station.  Its  value,  from 
their  point  of  view,  lay  in  the  fact  that  it  stood  directly 
in  the  path  of  the  class  of  people  they  wished  to  attract 
— business  men  who  went  daily  to  and  from  the  city. 


FIGURE  IV:    In  this  office,  work  is  carried  from  official  to  official  in 

a  straight  line.    Retracing  of  steps  is  to  a  large  extent  cut  out  and  lost  labor 

is  minimized 

In  spite  of  the  small  space  at  their  command — the 
room  was  only  14x16  feet — they  found  they  were  able, 
by  careful  arrangement,  to  make  it  conform  to  their 
needs.  Figure  III  shows  how  they  succeeded  in  making 
of  this  compact  room  an  attractive,  business-like  office. 

One  quarter  was  partitioned  off  to  secure  privacy  in 
the  transaction  of  intimate  business.  Besides  the  desk, 
this  private  room  was  made  to  contain  the  correspond- 
ence files  and  a  visitor 's  chair.  The  reception  room  oc- 
I  cupied  the  quarter  diagonally  opposite,  just  inside  the 
/  door.  Across  the  counter,  next  the  door,  the  necessary 
routine  of  sales  and  collection  was  transacted  with  the 
public  office.  The  stenographer  was  located  in  the  far 
quarter  of  the  room,  convenient  as  an  information 


80 ORGANIZING    AN    OFFICE 

clerk  and  yet  partially  shut  off  in  an  office  of  her  own 
by  the  stove  and  a  low  railing.  Two  large  front  win- 
dows gave  valuable  display  room  and  at  most  times, 
plenty  of  light.  Results  showed  that  this  careful  layout 
furnished  ample  space  for  business  with  neither  lost 
motion  nor  overcrowding. 

Tj^XAMPLES  of  offices  in  which  the  fundamental 
-»-J  principles  of  arrangement  are  followed  out  to  secure 
the  prompt  and  effective  handling  of  all  work. 

In  the  thoroughly  well  arranged  office,  continuity  of 
operation  is  essential.  An  example  of  a  layout  for  direct 
routing  of  work  is  shown  in  Figure  IV.  Every  process 
of  office  work  is  carried  on  in  a  straight  line,  with  as 
little  lost  motion  and  retracing  of  steps  as  would  be 
found  in  a  modern  lathe  room.  The  processes  so  follow 
each  other  and  the  departments  are  so  located  that  the 
idea  of  continuity  is  at  once  apparent.  No  department 
retards  or  interferes  with  the  work  of  any  other.  The 
minute  there  is  any  slow-up,  it  is  easy  to  find  in  just 
what  department  delay  is  occurring. 

The  office  manager,  by  the  location  of  his  own  room 
opposite  the  main  entrance,  can  keep  tab  on  all  business 
passing  in  the  general  office.  Next  to  the  office  manager 
sits  the  general  manager  with  the  door  of  his  office  also 
leading  into  the  general  office.  Opposite  the  general 
manager  and  adjoining  the  general  office  is  the  auditor, 
and  in  a  line  with  his  door  stands  the  vault.  A  narrow 
passageway  leads  to  the  drafting  room,  which  is  sepa- 
rated from  the  entrance,  maintaining  its  privacy. 

Left  of  the  main  entrance  is  a  long  hall  with  offices 
leading  away  from  it.  The  salesmen's  room  is  located 
near  the  exhibition  room  where  the  samples  are  kept  on 
display.  The  sales  manager  has  the  office  next  to  the 


PLANS    AND    LAYOUT 


salesmen.  The  president  of  the  company  is  located  at 
the  end  of  the  hall  with  his  private  secretary  conveni- 
ently near.  This  arrangement  secures  quick  handling  of 
routine  work. 


FIGURE  V:    A  large  reception  room,  suck  as  this  office  provides;  gives 

the  visitor  a  favorable  impression.     The  row  of  private  offices  suggests 

large  operations,  and  has  the  same  value  as  a  strong  advertisement 

Next  in  importance  to  convenience  for  the  employees 
is  the  general  impression  which  an  office  makes  on  a 
visitor  or  prospective  customer.  This  impression  has 
much  the  same  effect  as  the  personality  and  dress  of  a 
salesman.  What  the  caller  is  able  to  see  from  the  recep- 
tion room  may  cause  him  to  form  unconsciously  an 
opinion  of  the  business  either  favorable  or  unfavorable. 

For  this  reason  a  wise  executive  arranges  his  office  in 
the  manner  most  appropriate  for  his  business.  A  bank 
usually  plans  for  stability  and  soundness  in  its  archi- 
tecture and  conservatism  in  its  office  arrangement.  In 
the  real  estate  office,  the  arrangement  of  desks,  maps  and 
safe  deposit  fixtures,  emphasizes  in  a  practical  way  the 
solid  business  operations  of  the  concern. 


32 ORGANIZING    AN    OFFICE 

In  this,  you  need  make  no  attempt  at  extravagant 
show;  to  make  the  " office  dress"  bespeak  prosperity  or 
magnitude  is  less  effective  than  to  plan  for  maximum 
efficiency  and  let  this  speak  for  itself.  The  office  should 
in  every  way  reflect  the  true  merits  of  the  concern — 
should  wear  the  business-like  working  clothes  of  an  effi- 
cient enterprise.  Order,  neatness,  stability  and  business 
taste  should  be  the  fundamental  factors  in  determining1 
the  arrangement. 

An  office  giving  this  good  general  impression  is  shown 
in  Figure  V.  The  reception  room  is  large  and  the 
private  offices  lead  away  from  it  on  three  sides.  A 
visitor  can  take  in  the  entire  scheme  at  a  glance,  and 
the  rows  of  private  rooms  which  he  notices  suggest  mag- 
nitude in  operations,  especially  when  the  occupants  are 
frequently  passing  out  and  in. 

It  is  not  possible  to  lay  out  every  office  on  the  lines 
given  above.  The  size  and  shape  of  the  room  require 
departure  from  any  ideal.  But  when  the  offices  and 
desks  are  arranged  as  far  as  possible  so  that  the  processes 
of  business  take  a  direct  route  and  their  location  is  such 
as  to  offer  the  best  possible  facilities  for  light,  ventila- 
tion and  quiet,  you  are  reasonably  sure  of  greater  effi- 
ciency ,  and  less  confusion  and  loss  of  time. 


TN  BUSINESS  this  is  the  day  of  system.  The  business 
•*•  man  who  trusts  to  chance  and  circumstance  finds  his  way 
beset  with  those  obstacles  which  like  reefs  have  gathered 
many  business  wrecks  upon  their  crests. 

— Jeremiah  Dwyer 

Founder,  Michigan  Stove  Company 


Ill 
CONTROL  AND  MANAGEMENT 

By  Charle*  E.  Cake 

AS  a  business  outgrows  one-man  supervision,  the  wise 
executive  plans  for  the  focus  of  essentials  at  his 
desk.  The  president  of  a  large  organization  is  an  imper- 
sonal executive.  He  is  made  so  by  the  great  amount  of 
detail  which  must  be  done  by  a  corps  of  assistants.  To 
see  personally  all  these  assistants  would,  in  the  first 
place,  disturb  system,  and  in  the  second  place,  render 
impossible  any  careful  supervision  of  a  great  business. 
In  rare  instances  only  do  the  subordinate  employees  of 
the  company  come  in  personal  contact  with  the  president. 
Seldom  does  the  department  manager,  who  is  a  lieu- 
tenant to  the  executive,  carry  the  matters  of  his  depart- 
ment direct  to  the  president,  and  yet  every  movement 
that  these  assistants  make  is  by  order  of  the  president. 

Jt  becomes  necessary,  then,  to  handle  this  detail 
through  a  particular  method  which  will  enable  the  ex- 
ecutive to  receive  information  upon  the  progress  of  the 
business  and  then  direct  its  operation.  This  is  really 
the  basis  of  executive  system,  and  it  can  be  so  perfected 
as  to  bring  to  your  business  both  definiteness  and  pre- 
cision. 

An  excellent  example  of  a  business  organized  with 
this  aim  of  focusing  details  is  found  in  a  large  middle 
west  concern.  This  business  is  divided  into  fifteen  gen- 


84 ORGANIZING    AN    OFFICE 

eral  departments.  These  departments  of  the  general  of- 
fice operate  the  eight  districts,  which,  in  turn,  embrace 
the  numerous  branch  houses  of  the  company  situated  at 
every  important  commercial  point  in  the  United  States, 
as  well  as  the  firm's  foreign  interests. 

EXECUTIVE  committees  are  guided  by  department 
and  district  reports  in   which   every   non-essential 
is  brushed  away  and  only  the  big  tendencies  are  shown. 

The  problems,  policies  and  results  of  these  various  de- 
partments, districts  and  individual  branch  houses  are 
concentrated  in  the  executive  committee,  composed  of 
the  secretary,  vice-president,  treasurer  and  general  man- 
ager, with  the  president  as  chairman.  This  committee  is 
the  cabinet,  meeting  every  morning  in  the  president's 
office  at  eleven  o'clock.  All  important  matters  and 
policies  are  considered  at  this  meeting.  It  is  a  summary 
of  the  results  of  the  past  twenty-four  hours  and  a 
source  of  instruction  and  inspiration  for  the  following 
day.  Here  again  is  evidence  of  the  need  to  concentrate 
all  detail  in  order  that  the  president  may  grasp  the 
workings  of  every  department  without  having  to  analyze 
the  reports. 

The  departments,  which  are  general  in  character,  re- 
port to  the  officers  forming  the  executive  committee. 
These  officers,  therefore,  are  fully  versed  in  the  operation 
of  the  business  before  they  go  to  the  committee  meet- 
ing. The  president  is  thus  enabled  each  morning  to  re- 
ceive from  these  lieutenants  full  information  in  a  few 
minutes'  time  covering  all  departments. 

The  department  managers  are  trained  specialists,  be- 
cause the  matters  coming  under  their  jurisdiction  require 
that  they  be  thoroughly  conversant  with  the  affairs  of 
their  respective  departments.  The  district  manager  is  a 


MANAGEMENT  35- 


generalist,  because  he  concerns  himself  with  all  the 
phases  and  details  of  the  branches  under  his  charge. 

The  department  managers  are  usually  stationed  in 
the  general  offices.  The  district  managers,  who  repre- 
sent the  president  and  his  cabinet  in  the  field,  are  lo- 
cated at  strategic  points  and  exercise  jurisdiction  over 
their  districts  in  harmony  with  the  president 's  policies, 
and  instructions,  although  perhaps  a  thousand  miles  dis- 
tant from  the  president's  desk. 

The  president  is  kept  informed  by  the  department 
managers  regarding  the  general  affairs  of  their  respect- 
ive departments.  Specific  features  of  the  business  re- 
quiring the  consideration  of  the  president  and  executive 
board  are  submitted  to  the  committee  by  the  department 
managers,  who  in  turn  receive  specific  instructions  from 
their  respective  "cabinet  officers"  at  the  close  of  the 
committee  meeting.  Thus,  in  an  hour,  a  world-wide 
business  is  examined  and  given  new  impetus.  If  any 
other  method  were  followed  it  would  be  impossible  in  so- 
short  a  time  even  to  ascertain  the  progress  of  the  busi- 
ness. 

No  detailed  reports  are  made  direct  to  the  president. 
All  branch  reports  ultimately  reach  the  department  con- 
cerned, first  passing  through  the  hands  of  the  auditor. 
The  receipt  of  each  statement  is  immediately  recorded 
in  a  statement  record  book  kept  by  the  auditing  depart- 
ment. This  record  gives  the  name  of  the  branch,  the 
name  of  the  report  and  date,  and  evidences  in  a  simple 
manner  the  fact  that  certain  statements  have  been  re- 
ceived,- and  also  provides  a  concise  record  as  to  the 
promptness  of  the  various  branches  in  submitting  their 
statistical  reports.  These  reports  are  tabulated  in  various 
summary  records  by  the  auditing  departments,  and  these 
records  only  are  placed  before  the  president.  He  sel- 


ORGANIZING    AN    OFFICE 


dom  sees  the  report  itself  unless  some  unusual  matter 
brings  it  to  his  personal  attention. 

Copies  of  all  reports  submitted  by  the  branch  houses 
to  the  general  office  are  mailed  simultaneously  to  the 
respective  district  managers.  This  serves  as  a  double 
check  on  the  business  done  by  the  branch  houses  and 
keeps  the  district  manager  fully  informed  regarding  all 
the  interests  of  his  district.  The  district  manager  him- 
self makes  his  weekly  report  to  the  general  offices,  in- 
dependent of  the  local  manager.  The  department  man- 
ager is  in  a  position  to  judge  how  efficient  and  successful 
the  services  of  the  branch  manager  are,  and  can  suggest 
any  change  or  improvement  affecting  a  branch  house 
without  having  to  consult  with  its  manager. 

Every  feature  of  the  business  is  covered  in  the  weekly 
reports  of  the  different  departments,  and  reports  are 
fully  itemized. 

A  summary  of  the  various  branch  house  reports  is  sub- 
mitted to  the  president  weekly. 

On  his  desk,  the  president  continually  keeps  a  state- 
ment showing  in  detail  the  profits  of  the  various  branches 
for  the  preceding  month,  the  net  results  to  date  from  the 
beginning  of  the  fiscal  year,  and  the  same  figures  for 
the  previous  year.  In  this  way,  the  chief  has  a  profit- 
and-loss  history  of  the  business  always  before  him. 

DIVISION  of  responsibility  and  the  common  inter- 
change of  ideas  about  mistakes  and  valuable  ex- 
periences prevents  any  employee  from  going  far  wrong. 

Thus  the  president  receives  information  which  enables 
him  to  direct  the  complex  affairs  of  the  corporation.  Its 
course  is  from  the  local  representative  to  the  district 
manager;  then  to  the  department  manager;  next,  to  the 
executive  committee;  then  to  the  president.  With  this 


MANAGEMENT  37 


system  of  supervision,  the  beneficent  effects  of  a  local 
manager's  personality  on  the  business  under  his  charge 
are  retained,  and  any  shortcomings  or  delinquencies  on 
his  part  are  promptly  ascertained  and  remedied. 

So  it  is  with  the  operation  of  the  districts  and  depart- 
ments. No  one  employee  can  go  very  far  wrong.  Re- 
sponsibilities are  borne  jointly.  Technical  information 
is  not  a  matter  of  individual,  but  of  general  knowledge. 
The  experience  of  one  is  the  experience  of  all.  The  les- 
sons learned  at  one  branch  are  immediately  available  in 
the  operation  of  all  the  other  interests  of  the  corpor- 
ation. 

The  president  directs  the  operation  of  the  business  by 
the  channels  through  which  he  receives  his  information, 
but  his  instructions  touch  practices  of  general  impor- 
tance. The  department  managers  at  all  times  are  fully 
informed  regarding  the  president's  policies  and  desires, 
and  it  is  only  in  the  larger  affairs  of  the  company  that 
the  president  finds  it  necessary  to  issue  specific  instruc- 
tions. When  occasion  requires,  the  department  man- 
ager communicates  direct  with  the  president,  usually  by 
letter,  and  his  communication  is  returned  to  him  either 
with  a  reply  noted  thereon,  or  an  invitation  to  see  the 
president  personally  regarding  the  matter.  This  request 
is  in  the  form  of  a  sticker  bearing  a  number,  a  duplicate 
of  which  is  retained  by  the  president's  secretary  until 
the  matter  is  adjusted.  The  same  system  is  applied  to 
all  communications  from  department,  district  or  local 
managers  which  the  president  wishes  to  refer  to  any  of 
his  assistants  in  the  general  office. 

The  ramifications  of  this  business  are  such  that  it  is 
impossible  for  the  president  personally  to  visit  and  di- 
rect the  outside  forces.  He  has  little  time  for  inspecting 


88 ORGANIZING    AN    OFFICE 

his  branch  houses.  He  can  rarely  concern  himself  with 
details  of  any  sort.  He  can  only  direct  through  the 
agency  nearest  to  him,  and  that  agency,  whether  cabinet 
officer  or  department  manager,  takes  over  the  responsi- 
bility and,  in  turn,  sends  the  instructions  where  they 
belong. 

Just  as  a  costly  machine  is  reserves  for  its  most  profit- 
able work,  so  such  a  plan  as  thL  i:.  any  business  enables 
those  executives  and  department  heads  who  can  deliver 
expert  judgments,  to  avoid  details  and  make  their  influ- 
ence count  in  the  larger  questions  on  which  business  suc- 
cess or  failure  depends.  The  wise  executive  is  he  who 
grasps  these  principles  of  true  management  and  dele- 
gates to  subordinates  whatever  forms  of  detail  service 
€an  be  bought. 


TF  a  young  man  does  not  find  romance  in  his  business,  it 
is  not  the  fault  of  the  business,  but  the  fault  of  the  young 
man.  Consider  the  wonders,  the  mysteries,  connected  with 
the  recent  developments  in  that  most  spiritual  of  all  agents — 
electricity,  with  its  unknown,  and,  perhaps,  even  unguessed 
powers.  He  must  indeed  be  a  dull  and  prosaic  young  man 
who,  being  connected  with  electricity  in  any  of  its  forms,  is 
not  lifted  from  humdrum  business  to  the  region  of  the  mys- 
terious. Business  is  not  all  dollars.  These  are  but  the 
shell — the  kernel  lies  within,  and  is  to  be  enjoyed  later,  as 
the  higher  faculties  of  the  business  man,  so  constantly  called 
into  play,  develop  and  mature. 

— Andrew  Carnegie 

Founder,  Carnegie  Steel  Cc 


IV 

MACHINES  INSTEAD  OF 
CLERKS 

By  Kendall  Banning 

A  CERTAIN  manufacturer  decided  to  do  something 
radical  to  reduce  the  excessive  cost  of  paying  his 
men.    He  called  in  the  head  timekeeper. 

"Watkins,"  he  said,  ''something  has  got  to  be  done 
to  reduce  the  cost  of  operating  your  department — you 
must  tone  up  the  general  efficiency  of  your  assistants ;  it 
can't  be  done,  you  say? — well,  this  is  a  problem  which 
you  are  paid  to  handle ;  do  what  you  think  is  necessary, 
but  reduce  your  department  expenses." 

After  investigating  the  different  machines  on  the  mar-  /\ 
ket,  the  head  timekeeper  purchased  an  addressing  ma-  ^ 
chine  which  .^ould   operate    at   the   rate   of  fifty   per 
minute  and  ar~computing_machine  with  which  it  was  pos- 
sible to  add,   subtracter  multiply  with  a  speed   and 
degree  of  accuracy  altogether  beyond  the  most  efficient 
clerk. 

Equipped  with  these  devices,  he  set  about  reducing 
the  cost  of  operating  his  department. 

The  most  laborious  task  had  been  that  of  six  clerks 
who  did  nothing  but  write  the  names  on  time  cards,,  time 
tickets,  pay  envelopes  and  on  the  pay  roll  for  four  entire 
days  in  each  week.  Altogether  there  were  18,000  names 
to  write  each  week.  The  addressing  machine  turned  out 
this  work  in  a  day  and  was  operated  by  an  office  boy 


40 ORGANIZING    AN    OFFICE 

earning  only  $1.50.  This  was  a  considerable  saving  over 
the  wages  cf  six  clerks  for  four  days,  amounting  to 
$48.00.  Nor  was  the  saving  of  labor  the  only  good  thing 
about  the  new  method  of  handling  the  work.  The  names 
were  far  more  legible  than  when  they  were  hand  written, 
and  the  chance  of  making  mistakes  was  reduced. 

Next  to  copying  names,  the  most  laborious  task  had 
been  that  of  computing  wages.  It  required  two  full 
days  for  the  six  clerks  to  total  up  the  number  of  hours 
put  in  by  each  man  and  then  to  multiply  this  by  his 
hourly  rate.  Not  only  was  the  time  expended  on  this 
work  too  great,  but  owing  to  the  necessity  of  getting  the 
work  finished  in  time  to  pay  the  men,  all  of  the  clerks 
worked  at  high  speed  and  consequently  made  many  mis- 
takes. The  labor  entailed  in  figuring  the  piece  work  was 
equally  trying. 

Today  all  of  this  work  is  done  by  two  girls  with  the 
aid  of  an  adding  and  computing  machine.  Here  again  is 
a  large  saving — the  services  of  two  girls  cost  $8.00  for 
two  days,  where  the  services  of  the  six  men  cost  $24.00. 

INSTALLATION  of  up-to-date  time  and  labor-saving 
.1  machines  results  in  the  quick  and  correct  performance 
of  work  formerly  handled  by  clerks. 

Only  the  office  manager  who  has  had  an  experience  of 
this  sort  appreciates  how  essential  it  is  to  keep  in  touch 
with  the  development  of  time-saving,  labor-saving  and 
business-building  devices.  Most  employers  are  so  ac- 
customed to  having  work  done  the  old  way  that  they 
fail  to  see  just  where  new  methods  in  the  office  means 
advantage  to  them. 

It  is  not  yet  too  late  to  refer  to  the  'iele^hone  as 'a 
modern  machine.  Only  some  thirty  years  ago  there  were 
but  slightly  over  a  thousand  of  these  "new  f angled  de- 


MACHINES    FOR    CLERKS 41 

vices"  in  operation  in  the  entire  city  of  New  York  and 
only  one  central  office.  To-day  there  are  hundreds  of 
thousands  in  use,  averaging  around  a  million  calls  a 
day. 

With  the  telephone  have  come  its  many  adaptations  to 
the  peculiar  needs  of  every  business ;  chief  among  them 
are  the  telephone  ^^xtensionj^wires  that  permit  any 
number  of  receiving  instruments  Tn  as  many  private 
offices  to  be  connected  with  a  main  or  "trunk"  wire. 
This  service  requires  a  switchboard  and  usually  a  tele- 
phone girl.  Some  of  the  larger  offices  operate  large 
switchboards  that  have  a  dozen  or  more  trunk  wires  and 
innumerable  extensions  to  the  various  departments.  By 
this  means,  too,  one  department  may  be  connected  with 
another  through  the  medium  of  the  switchboard  without 
using  the  trunk  at  all.  To  save  time  and  delays,  private 
inter-department  telephone  systems  connect  one  office 
direct  with  another,  thus  eliminating  the  switchboard 
entirely. 

A  new  office  mechanism  is  a  new  business  opportunity, 
and  the  successes  scored  by  some  dealers  in  doing  busi- 
ness by  telephone  suggest  that  most  men  are  slow  to  take 
advantage  of  such  opportunities.  The  typewriter  is  an- 
other illustration  of  an  appliance  which  has  made  over 
the  world  of  longhand  writing,  yet  is  rarely  used  to  best 
advantage. 

)  rpYPEWRITERS    and    the  host   of  machines  that 

A      followed  have  done   aicay  with   the  old  fashioned 
and  often  illegible  method  of  longhand  correspondence. 

The  significance  of  this  invention  lies  not  only  in  the 
speed,  accuracy  and  legibility  of  the  business  communi- 
cation, but  also  in  the  long  series  of  attachments  for 
calculating,  perforating  and  duplicating,  and  of  appli- 


42 ORGANIZING    AN    OFFICE 

ances  for  reproducing  and  filing  typewritten  work.  Be- 
fore the  invention  of  this  machine,  the  number  of  words 
written  in  the  approved  commercial  style  by  a  good  pen- 
man was  scarcely  more  than  twenty-five  a  minute.  The 
record  number  of  words  produced  with  accuracy  on  a 
modern  machine  is  over  one  hundred  a  minute.  Carbon 
paper  makes  it  possible  to  imprint  up  to  a  dozen  copies 
of  the  original  writing  at  once.  Filing  systems  for  cor- 
respondence have  resulted  that  before  were  confined  to 
clumsy  letter-press  books  in  which  copies  of  communi- 
•cations  were  necessarily  arranged  chronologically. 

A  new  principle  of  the  typewriter  has  simplified 
the  former  laborious  billing  process.  By  using  a  good 
quality  of  carbon  paper,  a  label  or  order  can  be  made 
out  with  as  many  as  twenty  carbon  copies  for  records  in 
the  various  departments.  Seven  or  eight  copies  are  usu- 
ally enough,  however.  Special  attachments  automatically 
•care  for  proper  spacing  and  columnar  work. 

Following  the  introduction  of  the  typewriter  came  a 
ihost  of  machines  for  imitating  typewritten  work,  fol- 
lowed by  machines  for  signing  them  with  f ac-simile  sig^ 
<  natures,  folding  them,  addressing  envelopes,  sealing, 
stamping,  counting,  cancelling  and  tying  them  in 
bundles.  With  these  appliances  the  modern  form  of 
-circular  letter  was  made  possible  in  quantities  never 
•dreamed  of  in  the  old  days.  The  turn  of  a  crank  or  elec- 
tric switch  sets  going  a  series  of  machines  that  grind  out 
letters  signed,  stamped  and  sealed,  sorted  into  geograph- 
ical piles,  and  tied  up  in  numbered  bundles  ready  to  be 
-dumped  into  the  proper  mail  bags. 

Machines  for  reproducing  typewritten  letters  range 
from  a  simple  duplicating  machine  costing*  a  small 
sum,  to  mechanisms  capable  of  "turning  out  between 
three  and  eight  thousand  letters  an  hour. 


MACHINES    FOR    CLERKS 43 

These  machines  are  of  different  types;  one  type  re- 
produces a  letter  by  the  gelatine  transfer  process;  an- 
cther  by  the  stencil  duplicating  process;  and  a  third  is 
based  on  the  principle  of  the  printing  press  with  the 
addition  of  an  ink  ribbon  between  type  and  paper  to 
give  the  reproduction  the  appearance  of  actual  type- 
writer work. 

This  one  notion  alone  has  effected  radical  changes  in 
methods  of  business  by  opening  up  heretofore  impossible 
channels  of  trade  so  far  away  or  numerous  as  to  sup- 
plant salesmen 's  calls. 

Such  correspondence,  recognized  as  "form  letters/' 
loses  much  of  the  influence  that  personal  communications 
demand.  One  ear-mark  of  a  machine-made  letter  was 
formerly  the  lack  of  the  approved  name  and  address  of 
the  addressee  ajtove  the  salutation.  Now  the  types  se- 
lected for  use  oinmulti-copying  machines  are  designed  to 
conform  exactly  withlhe  letters  on  the  various  makes  of 
typewriters,  so  that  a&  filling  ji\"  of  a  personal  heading 
on  a  machine-made  letter  may  not  be  differentiated  from 
the  body  of  the  letter — if  the  typewriter  ribbon  matches 
the  color  of  the  ink  which  is  used  on  the  manifolding 
machine,  and  if  the  spacing  is  adjusted  the  same  on 
both  machines — thus  giving  each  letter  the  semblance  of 
a  personally  dictated  communication  written  especially 
to  the  addressee.  An  experienced  typist  may  "fill  in" 
between  800  and  1,200  letters  a  day.  Devices  are  now 
being  attached  to  typewriters  that  give  the  "filled  in" 
-salutation  perfect  alignment  with  the  body  of  the  form 
letter.  An  autograph  signature  in  zinc  etching  can  be 
printed  on  the  letter  in  black  or  purple  ink. 

Folding  letter  sheets  so  that  they  fit  into  their  en- 
velopes does  not  require  skilled  labor,  but  it  does  require 
a  facility  that  runs  up  the  expense  of  circularizing  if 


44 ORGANIZING     AN    OFFICE 

the  job  is  done  by  hand.  Assuming  that  50,000  letters 
are  to  be  sent  out,  an  expert  worker  might  be  able  to 
fold  6,000  a  day,  or  ten  workers  might  do  the  job  in  a 
day  of  eight  hours.  Where  quick  mailing  is  a  factor,  as 
in  a  mail  sales  campaign,  hand  labor  is  a  serious  handi- 
cap. 

This  volume  of  work  may  now  be  done  in  a  day  by  an 
inexperienced  clerk  or  officejx>y  by  merely  feeding  the 
sheets  into  the  trough  of  a  folding  machine,  operated 
by  a  motor.  There  are  two  styles  of  folding  machines, 
one  wording  on  the  same  principle  as  the  fold- 
ing devices  on  a  newspaper  press,  the  other  a  small  de- 
vice of  rubber  rollers.  Considering  the  labor  cost,  the 
economy  of  office  machinery  over  hand  work  is  a  factor 
to  be  reckoned  with  when  work  in  large  quantities  is  to 
be  done. 

A  device  which  eliminates  the  expense  of  addressing 
envelopes  is  the  open-front  envelope.  That  section  of  the 
envelope  which  usually  holds  the  address  is  made  trans- 
parent; the  letter  or  invoice  inclosed  is  then  so  folded 
and  placed  that  the  superscription  is  visible  through  the 
transparency  and  becomes  the  address. 

The  next  step  in  the  making  of  a  letter  is  the  sealing 
of  the  envelope.  The  good  old-fashioned  scheme  of  lick- 
ing the  flap  of  the  envelope  with  the  tongue  prevails  now 
only  in  isolated  cases.  The  moistened  sponge  projecting 
from  a  glass  receptacle  and  numerous  small  hand-sealers 
are  adapted  to  a  small  volume  of  routine  mail.  When 
the  daily  correspondence  runs  up  into  four  or  five  fig- 
ures, the  envelopes  can  be  sealed  on  an  appliance  that 
works  more  quickly  and  accurately  than  a  whole  depart- 
ment of  workers.  The  envelopes  are  merely  fed  into  a 
chute.  The  turn  of  a  crank  starts  the  machinery  that 
moistens  the  flaps,  closes  them,  stacks  them  under  pres- 


MACHINES    FOR    CLERKS 45 

sure  on  a  drying  rack  and  counts  them — as  a  check  upon 
postage  disbursements — at  the  rate  of  6,000  an  hour 
or  more,  depending  upon  the  style  of  machine. 

A  newer  machine  will  now  seal,  count  and  stamp 
envelopes  with  one  operation.  A  boy  can  feed  in  the 
envelopes  and  the  machine  will  turn  out  the  work  at  the 
rate  of  5,000  an  hour. 

The  stamping  of  envelopes  can  be  done  at  the  rate  of 
5,000  an  hour  by  a  machine  that  can  be  operated  by  any 
boy  or  girl.  The  envelopes  are  supplied  to  the  machine 
and  the  stamps  are  fed  in  long  rolls.  Such  machines 
also  register  the  stamps  used,  so  that  the  count  may  be 
checked  against  the  stamps  issued  and  against  the  en- 
velopes that  are  counted  on  the  sealing  machine.  As  a 
further  check  against  loss,  many  large  concerns  now 
perforate  their  stamps  for  purposes  of  identification. 
The  machine  for  thus  marking  them — the  perforation  is 
usually  in  the  form  of  the  initials  of  the  firm — as  simple 
and  inexpensive,  and  acts  upon  several  hundred  stamps 
at  each  operation.  Some  firms,  also,  by  arrangement 
with  the  postal  authorities,  cancel  their  own  stamps  by  a 
similar  process — a  system  that  guards  against  theft  and 
facilitates  the  work  of  postal  clerks,  thereby  avoiding 
mailing  delays. 

/COMPUTING  machines,  the  talking  machine  and  a 
V_x  dozen  other  ingenious  inventions  have  resulted  in 
far-reaching  economies  in  the  operation  of  modern  offices. 

These  facts  are  impressive  because  they  reflect  the 
spirit  of  modern  business  life — a  life  that  is  conspicu- 
ously alert  to  do  more  and  better  work,  at  less  cost  of 
time,  money  and  effort.  It  was  only  a  few  years  ago 
that  much  of  the  factory  work  now  being  done  by  ma- 
chinery was  done  by  hand,  and  the  world  marveled  at 


46 ORGANIZING    AN    OFFICE 

the  almost  human  adroitness  of  Yankee  mechanisms. 
The  same  ingenuity  has  been  applied  to  the  invention  of 
office  machinery.  The  office  output  has  increased  pro- 
portionately. 

Computing  machines  have  gone  so  far  beyond  ele- 
mentary stages  that  mental  calculation  is  practically 
done  away  with  in  many  large  business  offices.  In  addi- 
tion to  pay  roll  calculation,  such  appliances  in  standard 
and  special  makes  are  used  for  handling  numbers  and 
fractions,  making  inventories,  estimating  and  computing 
interest  and  discounts,  figuring  time,  distance,  scores, 
yardage  and  other  units.  Card  prmpjvjrip  Rr./i  grating- 
machines  have  made  classifications  and  statistics  of  the 
most  intricate  kinds  a  matter  of  hours  instead  of  weeks 
and  have  thus  contributed  to  the  exactness  of  business 

(building  as  a  science. 

The  talking  machine,  beginning  as  a  mere  ingenious 
toy,  has  developed  into  another  office  machine  of  thor- 
oughly practical  value  that  is  materially  cutting  down 
the  cost  of  handling  executive  work  by  simplifying  the 
dictation  of  correspondence.  These  machines  are  modi- 
fications of  the  wax-cylinder  phonograph  and  are  oper- 
ated by  talking  into  the  mouthpiece  and  thus  making 
records.  By  the  use  of  various  attachments,  the  dicta- 
tor may  start  and  stop  the  machine  at  will,  increase  or 
decrease  the  speed,  repeat,  make  corrections,,  and  do 
practically  all  the  work  that  is  ordinarily  expected  of  a 
stenographer.  The  cylinder  records,  when  completed, 
are  transferred  to  the  machine  of  the  typist,  who,  plac- 
ing the  receiving  tubes  to  her  ears,  transcribes  the  re- 
corded words,  adjusting  the  speed  nicely  to  suit  her 
convenience.  "When  a  wax  cylinder  is  once  used  it  is 
shaved  and  re-used — a  process  that  may  be  repeated 
many  times  before  the  wax  must  be  replenished. 


MACHINES    FOR    CLERKS 47 

This  system  has  proved  a  great  economy ;  and  it  is  of 
special  value  in  offices  where  the  demand  for  steno- 
'graphic  service  concentrates  on  short  periods  and  abates 
between  whiles,  thus  overworking  the  stenographers  at 
special  hours,  with  intervals  of  wasted  time. 

There  are  machines  for  wrapping  and  tying  bundles, 
that  will  wrap  and  tie  packages  of  a  uniform  size  at  a 
high  rate  of  speed.  Other  devices  number  sheets,  chang- 
ing their  figures  automatically  at  each  impression  or 
repeating,  as  may  be  desired. 

There  are  machines  into  which  miscellaneous  coins 
may  be  dumped  and  from  which  they  are  issued,  by  the 
turn  of  a  crank,  neatly  sorted  according  to  denomina- 
tions, counted  and  wrapped  in  bundles.  This  money- 
sorter  consists  of  a  shallow  metal  tray,  circular  in  shape, 
in  which  the  coins  are  placed.  By  revolving  this  tray 
the  coins  are  thrown  to  the  outer  edge  by  centrifugal 
force,  when  they  drop  into  the  proper  grooves  and  roll 
into  cylinders  which  indicate  the  number  of  coins. 

A  companion  machine  is  a  device  which  dispenses  with 
the  labor  of  making  change  by  dropping  the  proper 
coins  in  response  to  pressure  on  the  figures  of  its  key- 
board. 

Time  recorders  check  the  exact  minute  of  arrival  and 
departure  of  office  employees — machines  that  operate  with 
a  clock  attachment  and  which,  in  response  to  the  work- 
er's punch,  print  on  tabular  sheets  of  paper  his  prompt- 
ness and  delinquencies.  Arrivals  later  than  the  time 
scheduled,  or  departures  earlier  than  the  hour  estab- 
lished, may  be  printed  in  colors  that  flash  their  message 
to  the  boss  from  among  their  less  conspicuous  fellows. 
Another  time  recording  machine  is  a  compass-like  de- 
vice which  cuts  out  hours  of  clerical  work  by  computing 
the  actual  working  time  of  employees.  The  use  of  time 


48 ORGANIZING    AN    OFFICE 

records  has  improved  discipline  in  offices  and  shops  so 
perceptibly  as  to  increase  workers'  efficiency  several  per 
cent. 

Retail  store  fittings  that  are  being  used  in  offices  are 
the  overhead  cash  and  package  carrier  and  the  pneumatic 
tube.  A  large  editorial  office  in  New  York  is  equipped 
with  such  service  between  desks  and  departments  which 
are  located  on  different  floors.  It  has  found  the  service 
to  be  quicker  and  safer  and  considerably  less  expensive 
than  a  corps  of  office  boys. 

Besides  the  labor  saving  and  protective  office  machines 
here  mentioned,  there  are,  of  course,  many  others.  For 
instance,  the  check  protector,  which  perforates  checks 
and  prevents  fraud ;  and  the  rubber  date  stamps,  which 
record  time  and  set  themselves  for  each  succeeding 
day;  watchmen's  records,  which  graphically  show  each 
time  the  door  is  opened;  the  machine  which  figures  pay 
rolls  by  the  hour,  day  or  month,  and  in  fractions  and  in 
whole  numbers. 

OUBSTITUTION  of  machines  for  hand-labor  econo- 
O  mizes  not  only  in  clerk-hire,  but  also  in  the  amount 
of  floor  space  used  and  the  number  of  errors  made. 

But  after  all  these  mechanical  devices  have  been  de- 
scribed, the  most  vital  office  equipment  of  all  has  not 
been  mentioned — the  one  sheet  or  unit  system  of  record- 
keeping.  The  card  index  and  loose-leaf,  by  facilitating 
and  dispensing  with  clerical  work,  were  really  the  pio- 
neers in  the  field  of  office  efficiency.  As  their  applica- 
tion was  extended  to  meet  every  phase  of  business,  me- 
chanical devices  kept  pace.  Now,  with  the  vertical  filing 
cases,  card  records,  and  loose-leaf  systems  of  account- 
ing, the  modern  office  has  hardly  a  trace  of  resemblance 
to  the  office  of  a  generation  ago. 


MACHINES    FOR    CLERKS 49 

As  an  illustration  of  the  savings  the  ordinary  office 
may  effect  by  substituting  machine  work  for  hand  labor, 
the  manager  of  a  firm  in  the  middle  west  recently  ap- 
proximated the  weekly  cost  of  doing  the  office  work  now 
as  compared  with  the  costs  if  the  work  were  done  with- 
out mechanical  aid.  Here  is  his  approximation : 

Weekly  Saving 

Addressing  letters $  34.00 

Folding  letters 51.00 

Billing  machines 25.00 

Sealing  machines 17.00 

Imitation  letters 208.00 

Adding  machines 20.00 

Indicators        15.00 

Time  clocks 12.00 

Typewriter  attachments       16.00 

Total    .    .    , $398.00 

The  office  whose  work  is  done  by  the  pressure  of  elec- 
tric buttons  and  the  turning  of  levers  is  no  longer  a  fic- 
tion. Your  office  management  is  not  fully  effective  ex- 
cept you  recognize  as  business  opportunities  the  labor- 
saving  and  trade-getting  appliances  your  work  calls  for 
and  keep  in  touch  with  progress  in  those  machines  best 
suited  to  the  size  and  range  of  your  business. 


1Y/TANY  a  profit  dribbles  into  the  waste  basket  through  the 
•*•  myriad  discardings  of  petty  supplies.  Nowhere  are 
pennies  more  unconsciously  wasted  than  in  the  average  busi- 
ness office,  and  nowhere,  once  the  habit  has  been  formed,  can 
they  be  more  easily  saved. 

— John  M.  Eaton 


THE  BUSINESS  MAN'S  DESK 

By  Edward  Mott  Woolley 

OUR  modern  philosophy  of  desks  has  become  almost 
as  concrete  as  the  philosophy  under  which  a  lathe 
or  dove-tailing  machine  is  operated.  This  philosophy 
looks  upon  the  desk,  not  as  a  piece  of  furniture,  but  as 
a  working  appliance.  It  is  the  pivot  upon  which  swings 
all  the  executive  detail.  If  something  is  wrong  with  one 
of  its  cogs  or  pinions  the  work  of  the  executive  is  thrown 
out  of  adjustment.  If  the  delayed  orders,  the  lost  sales, 
the  misunderstanding  of  instructions,  or  the  general  in- 
competence of  the  office  force  are  traced  back,  they  are 
more  than  likely  to  lead  to  the  desk  methods  of  the  ex- 
ecutive himself. 

We  all  know  the  old-fashioned  roll-top  desk — the 
"high  roll,"  with  its  maze  of  pigeon-holes  and  curious 
compartments  under  the  sliding  lid.  We  still  see  it  in 
common  use,  though  in  offices  that  have  studied  the  sub- 
ject it  is  disappearing.  In  its  place  has  come  either  the 
"low  roll"  or  the  flat-top  desk.  The  former  has  very 
few  pigeon-holes  and  the  latter  none  at  all,  though  both 
are  equipped  in  another  way. 

When  the  old-fashioned  roll-top  desk  came  into  use 
there  was  a  reason  for  all  these  pigeon-holes  and  com- 
partments. That  reason  lay  in  the  absence  of  other 
known  facilities  for  taking  care  of  desk  detail.  Here,  in 


DESK    WORK  51 


front  of  the  executive,  lay  his  only  available  working 
file.  When  he  had  read  his  morning's  letters  he  chucked 
them  into  one  of  the  compartments  until  he  could  an- 
swer them — nor  was  he  particular  in  his  selection  of 
compartments.  Sometimes  pending  correspondence  be- 
came mixed  with  estimates,  bills,  reports  or  other  docu- 
mentary matter  and  was  forgotten  for  days  or  weeks. 
The  same  thing  happened  to  estimates,  bills  and  reports. 
And  down  below,  in  the  drawers,  accumulated  a  wonder- 
ful mixture  of  catalogs,  customers'  lists,  cost  and  ex- 
pense reports,  complaints  and  cigars.  Similar  conditions 
prevail  today  in  many  offices,  despite  the  fact  that  desk 
mechanism  has  made  such  methods  obsolete.  In  your 
office  and  among  your  workers  you  can  find  no  more 
profitable  point  of  reorganization  than  in  systematizing 
the  work  and  arrangement  of  the  individual  desk. 

The  old-time  desk  manufacturer  had  no  particular 
kind  of  business  in  view  when  he  got  up  that  huddled 
group  of  pigeon-holes  and  honey-combed  openings.  In 
his  mind  they  represented  a  composite  need  equally 
available  for  a  lawyer,  doctor,  manufacturer  or  merchant. 
His  chief  aim  was  to  get  pigeon-holes  enough  so  that 
somewhere  among  them  might  be  found  compartments 
to  suit  special  needs. 

Now,  the  lawyer  needed  oblong  holes  for  his  legal  doc- 
uments; the  doctor  required  compartments  of  a  certain 
size  for  his  prescription  blanks;  the  manufacturer  called 
for  a  suitable  receptacle  for  his  factory  reports.  Thus, 
when  a  merchant  bought  a  desk,  he  bought  not  only 
equipment  for  himself,  but  for  every  other  sort  of  busi- 
ness in  the  directory.  Consequently,  he  jammed  his  un- 
answered correspondence  into  the  place  intended  for  th& 
lawyer's  writs,  and  kept  doing  things  of  this  sort  until 
his  desk  resembled  a  prize-contest  puzzle.  Half  the  ex- 


62 ORGANIZING    AN    OFFICE 

ecutive's  time  was  spent  in  searching  for  documents  that 
might  have  been  anywhere  from  the  topmost  crevice  to 
the  bottom  drawer. 

But  the  age  of  specialization  dawned,  and  desk  manu- 
facturers began  to  study  the  problem  of  saving  the  ex- 
ecutive 's  time.  It  was  seen  that  the  outward  form  of  the 
desk  was  no  more  than  a  building  in  which  to  house  a 
more  or  less  intricate  machine. 

SELECTION  of  the  right  kind  of  desk  and  the  proper 
O  arrangement  of  information  in  it  prepares  the  way 
for  the  efficient  handling  of  the  day's  work. 

The  chief  attention,  then,  was  given  to  the  machine, 
and  not  to  the  walls  that  enclosed  it.  But  the  same 
machine  would  not  do  for  every  kind  of  business.  So, 
as  these  business  wants  were  studied,  special  adaptations 
were  made — not  so  much  in  the  desk  itself  as  in  the  in- 
terior layout.  The  desk,  in  other  words,  became  a  sort 
of  filing  cabinet  for  papers  in  the  course  of  administra-- 
tion. 

Then  the  desk  developed  still  further  and  became  not 
only  a  filing  cabinet  for  certain  classes  of  pending  docu- 
ments, but  a  working  index  for  subsidiary  current  files. 
That  is  what  the  modern  desk  is  today. 

The  nature  and  extent  of  the  business,  of  course,  must 
determine  the  mechanism  of  the  desk.  Some  executives 
find  it  possible  to  make  the  desk  itself  hold  all  or  most 
of  their  pending  papers;  in  order  to  accomplish  this, 
they  avail  themselves  of  numerous  adaptations  for  get- 
ting just  the  filing  facilities  needed.  Instead  of  buying 
'drawers  and  compartments  without'  any  analysis,  they 
chart  their  requirements  and  get  the  drawers  or  sections 
they  want.  If  they  need  card-index  systems  chiefly,  they 
buy  the  drawers  designed  for  that  purpose;  if  their 


DESK    WORK  53 


papers  are  large,  like  the  average  letter,  they  equip 
themselves  with  vertical  filing  drawers;  if  they  have 
many  documents  of  legal  size,  they  get  document  sec- 
tions. Or  they  combine  these  compartments  in  the  pro- 
portion that  best  suits  them. 

But  if  the  business  is  larger,  or  for  any  reason  it  is 
not  desirable  to  turn  the  whole  desk  into  a  file,  then  the 
subsidiary  desk  file  comes  into  play,  while  the  desk  itself 
is  more  or  less  simplified. 

Take  a  typical  '  *  low  roll ' '  desk  and  inspect  its  mechan- 
ism. In  the  space  immediately  under  the  lid  you  find 
not  more  than  half  a  dozen  receptacles.  One  is  the 
locked  drawer  for  valuables ;  the  others  are  for  pens  and 
pencils,  letter-sheets,  envelopes,  check-book  and  bank- 
book. 

The  upper  left-hand  drawer,  instantly  available  to 
the  executive  as  he  turns  in  his  swivel  chair,  contains  the 
card-index.  The  shallow  center  drawer  is  divided  into 
little  bins  for  clips,  pen-points,  rubber  bands,  erasers, 
and  the  like.  The  upper  right-hand  drawer  holds  the 
vertical  filing  system  for  work  in  process.  Beneath  these 
are  storage  drawers — not  ordinarily  used  for  any  filing 
purposes  whatever. 

Now  for  a  minute  study  the  vertical  filing  drawer 
— always  remembering  that  the  papers  filed  in  a  desk 
or  in  cabinets  subsidiary  to  a  desk,  are  connected  with 
unfinished  business.  The  moment  the  transaction  is 
closed  these  papers  go  to  permanent  files. 

This  vertical  file  is  arranged  on  the  order  of  modern 
letter  files.  It  consists  of  manila  folders  between  press- 
board  guides,  properly  fitted  with  tabs  and  compressors. 
It  may  be  indexed  on  the  tabs  alphabetically,  numer- 
ically, geographically,  chronologically,  or  in  any  way 
to  suit  the  peculiar  needs  of  the  executive.  In  the  ordi- 


54 ORGANIZING    AN    OFFICE 

nary  business  this  file  will  contain  such  classifications  as 
"Pending  Correspondence/'  "Rush  Dictation,"  "Tele- 
graph Business, "  "Telephone  Business, "  "Unfinished 
Matters/'  "Personal  Papers/'  and  so  on.  Into  these 
folders  go  the  papers  that  were  chucked  into  the  honey- 
combs of  the  old-time  desk. 

/CLASSIFICATION  of  information  and  the  use  o 
V^  the  card  index  and  vertical  filing  system  makes 
the  modern  desk  in  itself  a  complete  working  machine. 

Now  turn  to  the  card-index  drawer  again.  A  card- 
index  is  merely  a  record  of  information,  so  arranged  that 
any  given  fact  may  be  obtained  in  the  shortest  possible 
time.  Every  business  has  its  own  class  of  facts.  These 
may  pertain  to  customers'  names,  prospects,  goods  in, 
stock  or  ordered,  salesmen's  routes,  estimates,  credits — 
a  hundred  subjects  that  are  bobbing  up  continually.  As 
many  sets  of  cards  may  be  used  as  desired.  In  some 
desks  half  the  drawers  are  used  for  card-index  systems. 

This  information  may  be  complete  on  the  cards,  or 
the  latter  may  simply  show  a  reference  to  a  file  outside 
the  desk.  Now  appears  the  value  of  the  subsidiary  desk 
file,  which,,  although  separate  from  the  desk,  is  a  vital 
part  of  it.  The  desk  and  the  file  together  play  the  role 
of  vanished  pigeon-holes.,  but  they  do  it  infinitely  better 
and  on  a  vastly  broader  scope. 

In  these  two  appliances — the  desk  and  the  file  that 
stands  within  reach — we  have  the  machine  that  is  really 
the  heart  of  the  business  or  department.  The  executive 
is  the  engineer  who  runs  that  machine,  assisted  by  his 
clerks.  Even  when  the  desk  itself  is  made  the  chief  file 
for  pending  matters,  the  routine  detail  of  keeping  the 
should  be  handled  by  a  capable  clerk. 

In  a  typical  machine  of  this  sort,  the  desk  of  the  man- 


DESK    WORK  55 


ager  of  a  manufacturing  house,  the  bottom  drawers  of 
the  cabinet  are  devoted  to  catalogs,  drawings  and  sim- 
ilar large  and  bulky  papers.  The  other  drawers  contaiik 
salesmen's  reports,  follow-up  systems,  comparative  sta- 
tistics, advertising  figures,  buying  records,  current  in- 
voices, stock  records  and  special  information  of  this  sort. 

If  the  alphabetical  system  of  indexing  is  followed,  no 
separate  index  is  required.  But  many  executives  prefer 
the  numerical  method;  then  the  desk  itself  will  contain 
the  card-index  system,  where  reference  can  be  made  to 
it  instantly. 

For  example,  the  executive  wishes  to  refer  to  his  ad- 
vertising statistics  under  the  sub-title  of  some  magazine. 
He  turns  to  his  desk  cards  and  finds  the  one  bearing  the 
name  of  the  periodical,  in  its  alphabetical  position  on  the 
tray.  This  gives  the  number  of  the  folder  in  the  cabi- 
net. Cross-indexing  of  this  sort  may  be  carried  out 
indefinitely. 

Often  the  index-card  itself  can  be  used  to  present 
brief  summaries  or  tabulations,  or  concise  statements  of 
facts,  so  that  the  mere  reference  to  the  card  will  suffice,, 
without  opening  the  cabinet. 

The  benefits  from  systematized  desk  procedure  are 
seen  even  in  the  most  ordinary  transactions.  Suppose 
that  a  customer  calls  up  on  the  'phone  and  asks  for  a 
verbal  summary  of  an  estimate  on  a  prospective  job.  It 
may  be  that  the  customer  has  mislaid  the  written  esti- 
mate or  it  has  passed  into  the  hands  of  some  employee 
who  has  locked  it  up  in  his  desk  and  gone  out  for  an 
hour  or  two.  Many  concerns  thus  called  on  for  a  verbal 
condensation  of  an  estimate  would  not  be  able  to  give  it 
without  considerable  delay.  But  the  executive  with 
modern  desk  methods,  still  holding  the  wire  open,  turns 
to  his  card-index  and  then  to  his  desk-file,  gets  the  car- 


56 ORGANIZING    AN    OFFICE 

bon  of  the  estimate  blank  and  gives  the  information  on 
the  spot. 

Every  executive  has  an  endless  chain  of  demands  upon 
him  for  specific  information.  The  president  calls  on 
the  general  manager  over  the  'phone  for  the  costs  on 
some  piece  of  work;  the  treasurer  asks  for  the  returns 
from  some  advertisement;  the  superintendent  is  in  a 
hurry  for  a  schedule  of  ingredients;  customers  are  ask- 
ing continually  for  this  or  that.  Such  demands  con- 
sume a  large  percentage  of  the  desk  time  of  the  executive 
unless  the  desk  itself  is  made  a  tool  for  supplying  the 
answers  quickly. 

It  does  not  make  much  difference  what  position  the 
executive  holds;  his  desk  procedure,  if  inefficient,  may 
keep  him  working  far  into  the  night.  If  efficient,  he 
will  get  his  work  out  at  closing  time. 

Even  the  banker  has  reformed  his  desk  operations 
during  recent  years.  No  longer  does  he  keep  his  credit 
information  tucked  away  in  unclassified  pigeon-holes  and 
drawers.  His  desk  is  merely  the  center  of  a  highly 
specialized  finding  system.  The  professional  man  is  fast 
falling  into  line  and  is  discarding  the  desk  as  a  mere 
piece  of  furniture  and  is  turning  it  into  a  machine.  The 
physician,  for  instance,  looks  in  his  card-index  in  or  upon 
his  desk  and  locates  his  case  histories  and  special  articles 
to  be  consulted  in  magazines.  The  real  estate  and  insur- 
ance agent — even  the  small  store  manager — has  learned 
to  put  detail  out  of  mind  and  to  keep  it  at  his  fingers ' 
ends  in  this  way. 

The  flexibility  of  the  supplemental  desk  file  makes  it 
the  ideal  plan  for  many  classes  of  executives.  The  file 
may  be  of  any  dimensions.  It  may  have  any  one  of  a 
hundred  drawer  and  compartment  arrangements  and  in- 
dexing systems.  If  the  business  is  small,  a  little  box 


DESK    WORK  57 


containing  a  hundred  cards  may  be  found  sufficient. 
Arranged  in  alphabetical  form,  they  may  show  lis+s  of 
customers,  records  of  stock  or  sales,  follow-ups,  namea 
of  employees  or  of  prospects.  In  the  same  box,  or  sepa- 
rately if  desired,  may  be  kept  a  card-tickler  system, 
with  the  guides  arranged  by  the  day,  week  or  month. 
All  the  cards  in  the  "Monday"  classification,  for  in- 
stance, indicate  the  matters  to  be  taken  up  on  that  day. 

PREPARATION  for  the  most  efficient  kind  of  work 
has  very  largely  resulted  in  replacing  the  old-fash- 
ioned roll-top  with  the  low-roll  or  flat-top  desk. 

In  selecting  a  type  of  desk,  a  large  number  of  execu- 
tives now  prefer  the  flat-top  standing  clear  of  the  floor 
in  sanitary  fashion.  There  is  a  certain  caste  about  the 
"low-roll"  to  be  sure,  but  the  flat-top  desk  offers  no 
temptation  whatever  for  cluttered  pigeon-holes.  Here 
is  absolute  simplicity.  The  filing  facilities  in  the  draw- 
ers or  the  subsidiary  desk  cabinet  makes  this  simplicity 
possible. 

One  executive  in  a  big  house  keeps  nothing  on  his 
desk  or  inside  it  except  his  inkstand,  pen,  and  such  docu- 
ments as  are  under  his  consideration  at  the  moment.  He 
takes  pride  in  pointing  to  the  lonesome-looking  top,  and 
showing  his  friends  the  empty  drawers.  His  secretary, 
at  another  desk,  has  the  card-index  system  and  is  within 
instant  reach  of  the  desk  cabinet  file.  A  year  ago  this 
executive's  desk  was  literally  buried  by  papers  of  every 
description.  He  was  a  slave  to  the  detail  of  his  desk — 
which  at  that  time  was  an  old-fashioned  high-roll.  In 
the  reformation  he  went  from  one  extreme  to  the  other. 
The  secretary  keeps  an  hourly  tickler  of  important  busi- 
ness, and  sees  that  the  executive  is  kept  informed. 

.The  general  layout  of  an  executive's  desk  is  arranged, 


58 ORGANIZING    AN    OFFICE 

in  the  modern  office,  along  the  lines  described  here.  A 
definite  equipment  is  assigned  to  each  desk — pens,  pen- 
cils, pins,  clips,  rubber  bands,  forms.  Twice  a  week  a 
boy  replenishes  the  receptacles  at  a  specified  hour.  He 
«hecks  the  items  from  a  list  that  is  furnished  him ;  noth- 
ing is  allowed  to  go  on  or  in  the  desk  that  is  not  desig- 
nated in  the  layout. 

The  metal  telephone  bracket  has  been  found  a  time- 
saver  by  numerous  executives  who  had  been  annoyed 
and  delayed  by  the  loose  cord  that  habitually  became 
entangled  in  the  papers  on  the  desk.  The  telegraph  call, 
the  desk  clock,  the  little  bracket  for  holding  the  list  of 
appointments,  the  roll-paper  bracket  attached  to  the 
'phone  for  memoranda,  the  quick-drying  ink  pad  for 
rubber  stamps,  the  use  of  different  paper  clips  for  dif- 
ferent purposes — these  and  similar  appliances  are  avail- 
able to  the  executive  and  contribute  materially  to  the 
speeding  up  of  his  desk  work  in  much  the  same  way  as 
the  appliances  on  factory  machinery  enable  the  mechanic 
to  produce  better  work  in  less  time.  The  desk  of  the 
modern  business  man  is  no  longer  a  piece  of  furniture 
at  which  to  sit;  it  is  an  instrument  by  means  of  which 
he  is  enabled  to  increase  his  day's  work. 


CYSTEM  means  to  a  business  what  good  tools  mean  to 
^  a  craftsman.  A  merchant  can  do  good  work  no  more 
than  a  craftsman  does  good  work  unless  he  has  the  mechanical 
means.  And  the  mechanical  means  of  the  business  man  is 
system. 

— Phillip  A.  Conne 

Secretary  and  Treasurer,  Saks  &  Company 


PART  II-LAYING  OUT  AN 
ACCOUNTING  SYSTEM 

Invention  in  Methods 

A  NDREW  Carnegie  said:  "Take  away  all  our 
*•  factories,  our  trade,  our  avenues  of  transpor- 
tation, our  money,  but  leave  me  our  organization 
and  in  four  years  I  shall  have  re-established 
myself." 

The  processes  of  modern  business  are  like  the 
functions  of  a  complicated  machine,  and  the  ex- 
ecutive must  organize  every  part  of  his  establish- 
ment as  carefully  as  an  inventor.  Organization 
means  running  the  machine  with  all  its  parts  in 
harmony. 

The  management  of  a  large  corporation  is 
organized  thought,  exactly  as  a  machine  is  the 
organized  thought  of  an  inventor. 

The  executive  must  be  a  specialist  along  the 
lines  which  make  for  efficiency  in  administration. 
He  must  have  that  God-given  quality,  capacity 
for  invention  in  organization.  There  is  just  as 
real  invention  in  the  field  of  organization  and 
administration  as  in  the  field  of  mechanics. 
Efficient  organization  is  an  asset  which  counts  for 
commercial  and  industrial  success  more  now 
than  before. 


JAMES  B.  LOGAN 

Chairman  of  the  Board  of  Directors,  United  States  Envelope 
Company 


VI 


MAKING  THE  ACCOUNTING 
ROOM  CONVENIENT 

By  Wesley  A.  Stanger 
Formerly  Sales  Manager,  Royal  Typewriter  Company,  Chicago  Branch 

WHERE  a  business  is  small  the  accounting  work 
may  not  be  sufficient. to  require  a  separate  room. 
In  a  small  store  the  entire  work  may  be  done  by  part- 
time  work  at  a  single  desk.  The  larger  store  will  re- 
quire three  or  four  bookkeepers,  while  the  largest  city 
department  stores  frequently  have  an  entire  floor  sec- 
tion devoted  solely  to  the  accounting  department.  In 
every  case,  however,  there  are  certain  principles  in  the 
location  and  arrangement  of  the  accounting  room  which 
make  for  convenience,  economy  and  practical  value. 

In  the  first  place,  the  accounting  room  should  be  sepa- 
rate from  the  rest  of  the  office,  so  as  to  prevent  intru- 
sion from  the  outside  that  will  interfere  with  the  work 
of  the  accountants  and  clerks.  This  further  secures  pri- 
vacy in  connection  with  certain  records  that  should  be 
confidential  and  known  only  to  one  or  two  men  in  con- 
trol within  the  department  itself. 

In  the  second  place,  the  room  should  be  accessible  for 
customers  and  executives.  The  cashier's  window  must 
be  near  the  entrance  of  the  office  in  order  to  give  out- 
siders easy  access  to  it,  while  the  department  as  a  whole 
should  be  placed  conveniently  for  the  executives  directly 
interested,  and  also  for  the  credit,  collections  and  other 
sections  closely  connected  with  the  accounting  work. 


62 ACCOUNTING    PRINCIPLES 

In  a  factory,  raw  material  enters  at  the  receiving  door 
and  progresses  in  logical  order  from  department  to  de- 
partment until  it  comes  out  as  finished  product.  The 
same  principle  applies  with  equal  weight  in  the  office. 
The  loss  of  time  incurred  in  taking  papers  from  one  end 
of  a  large  room  to  another  and  then  bringing  them  back 
to  the  starting  point  is  an  important  thing  to  be  consid- 
ered. But  even  more  important  is  the  possibility  that 
papers  will  be  lost  in  the  transfer. 

Another  simple  but  significant  thing  to  remember  is 
that  all  accounting  work  should  be  centralized  for  the 
same  time,  space  and  labor  saving  reason  which  compels 
the  grouping  together  of  all  correlated  work;  it  facili- 
tates intercourse  between  employees;  no  time  is  lost  in 
going  from  one  record  to  another ;  and  continuous  prog- 
ress results.  Further,  centralization  tends  to  eliminate 
unoccupied  space — an  important  feature  in  the  arrange- 
ment of  every  office. 
i 
j 

PRINCIPLES  of  arrangement  applied  to  the  account- 
ing room  secure  privacy  or  accessibility,  centraliza- 
tion of  work  or  continuity  of  operations  as  desired. 

The  application  of  these  four  principles,  of  course, 
must  be  in  accordance  with  factors  that  vary  in  different 
offices — the  size  and  shape  of  your  main  office,  the  vol- 
ume and  kind  of  business,  and  the  relative  importance 
of  your  various  records.  One  company,  for  example, 
needs  much  space  for  the  records  of  the  cost  department, 
while  another  business  takes  up  a  large  amount  of  room 
with  the  detailed  record  of  thousands  of  customers'  ac- 
counts. While,  therefore,  arbitrary  plans  can  not  be 
given,  the  four  fundamental  principles  may  be  followed 
to  good  effect. 

Figure  VI  shows  an  accounting  office  of  medium  size 


OFFICE    ARRANGEMENT 


63 


which  embodies  these  four  fundamental  principles  very 
well.  As  the  visitor  enters  from  the  street,  he  finds  the 
cashier's  cage  directly  on  his  right.  Through  the  win- 
dow of  the  cage  the  cashier  receives  all  mail  and  remit- 
tances brought  by  individuals  in  person.  Mail  is  opened 
in  the  cashier's  office,  whence  cash  orders  pass  for  entry 
to  the  bookkeepers  in  the  rear,  while  the  cash  itself  is 
deposited  in  the  safe.  Other  orders  pass  to  the  order 
department,  which  is  opposite  the  bookkeepers  and  to 
the  left  of  the  main  entrance.  Just  back  of  the  book- 
keeping department  is  the  auditor,  who  also  acts  as  the 
credit  man. 


FIGURE  VI:     Convenience  is  the  keynote  in  this  accounting  room.     The 

bookkeepers  are  removed  from  both  the  general  offices  and  the  public,  and 

are  thus  free  from  interruption 

Though  quite  compact,  this  arrangement  is  ideal  for 
the  accounting  office  where  work  is  not  complex.  In  this 
instance,  the  president's  office  adjoins  the  office  of  the 
auditor.  In  larger  establishments  it  is  not  necessary 
for  the  offices  of  the  executives  to  be  close  to  the  account- 
ing department. 


64 


ACCOUNTING    PRINCIPLES 


In  one  office  of  pretentious  proportions  the  president 
is  at  the  extreme  end  of  the  office  from  the  accounting 
room  (Figure  VII).  All  executive  offices  are  arranged 
on  a  hall  that  leads  to  the  general  office,  and  the  presi- 
dent's office  is  at  the  far  corner.  Between  his  office  and 


FIGURE  VII:     Privacy  for  accounting  work  is  effectively  secured  in  this 

office.     Entering  from  the  main  hall,  the  visitor  sees  the  busy  accounting 

room,  but  does  not  come  into  direct  contact  with  it 

that  of  the  secretary  is  that  of  the  private  secretary,  who 
serves  both  officials.  Next  to  the  secretary  comes  the 
treasurer,  and  then  the  auditor,  who  is  nearest  the  en- 
trance to  the  main  office. 

When  a  visitor  enters  the  long  hall  the  first  door  he 
reaches  is  that  leading  into  the  general  office.  The  cash- 
ier occupies  the  cage  at  his  immediate  right.  Her  win- 
dow is  placed  near  the  door  for  the  convenience  of  col- 
lectors, express  drivers  and  others.  Doors  are  so  ar- 
ranged that  she  can  walk  from  her  cage  into  the  execu- 
tives' rooms  without  going  into  the  general  office  or  out 
into  the  hall.  The  assistant  auditor's  desk  occupies  the 
space  next  beyond  the  cashier,  where  he  has  immediate 


OFFICE    ARRANGEMENT 


65 


access  to  both  the  cashier  and  the  auditor,  and  can  over- 
look the  entire  office  force.  On  his  right  are  the  cost  and 
filing  departments.  In  front  of  him  are  double  rows  of 
desks  for  clerks  and  general  bookkeepers.  All  of  these 
desks  face  the  main  entrance.  Visitors  entering  the  office 
see  the  busy  accounting  department — but  no  more. 


FIGURE  VIII:    In  this  accounting  room,  the  bookkeepers  are  surrounded 

by  offices  and  thoroughly  cut  off  from  outside  intrus'on,  although  free  access 

is  had  to  them  from  each  of  the  private  offices 

fn  this  big  office  orders  pass  continuously  in  one  direc- 
tion from  the  mail-opening  department  to  all  depart- 
ments interested.  The  traffic,  purchasing  and  sales  de- 


66 ACCOUNTING    PRINCIPLES 

partments  are  conveniently  near  together,  and  in  the 
farthest  corner  is  the  filing  department,  to  which,  in  the 
•usual  course  of  handling,  papers  naturally  find  their 
way. 

Another  office  (Figure  VIII),  rectangular  in  shape, 
has  all  private  offices  along  the  sides  and  at  one  end, 
each  with  a  door  leading  into  a  central  accounting  de- 
partment. The  auditor  is  in  the  very  center  of  this 
room,  on  a  platform  raised  six  inches  above  the  floor. 
On  the  right  is  seated  the  chief  clerk,  on  the  left  the 
cost  clerk.  The  other  desks  are  arranged  in  rows  on 
either  side  of  the  auditor.  This  is  ideal  centralization ; 


Dn 

DESKS 

D  D  D  D"u 


FIGURE  IX:    Accessibility   rules   in   the   arrangement   of  this   office. 

Coming  in  from  the  street,  the  caller  immediately  faces  the  busy  accounting 

force,  tuith  the  auditor  in  front  of  them  and  near  the  entrance 

it  facilitates  progressive  work,  but  it  gives  freedom  from 
intrusion  in  only  a  moderate  degree. 

A  visitor  coming  into  the  office  illustrated  in  Figure 
IX  finds  the  sales  department  on  his  right,  and  the  pres- 
ident's office  on  his  left.  An  aisle  extends  to  the  far  end 


OFFICE    ARRANGEMENT 


67 


of  the  room,  from  which  doors  on  the  right  lead  into  the 
private  offices  of  the  general  manager  and  the  super- 
intendent. Another  aisle,  just  beyond  the  president's 
office,  has  doors  on  the  left  leading  into  the  offices  of  the 


CASHIER 


ACCOUNTING   ROOM 


GENERAL  OFFICE 


FIGURE  X:     The  manager  is  the  central  figure  of  this  arrangement. 

From  his  office  he  can  step  either  into  the  accounting  room  or  the  general 

office,  and  thus  the  work  focuses  toward  his  desk 

treasurer  and  the  cashier.    The  rest  of  the  oblong  room 
is  taken  up  with  the  accounting  department. 

Within  this  department  sections  are  arranged  with  a 
particular  view  to  accessibility.  Immediately  in  front 
of  the  manager's  door  is  located  the  desk  of  the  auditor, 
and  the  clerks  in  the  auditing  department  face  him  like 
pupils  in  a  school  room.  In  front  of  the  auditor  and  to 
the  left  is  the  freight  accounting  department,  and  to  the 
right  the  purchasing.  Behind  the  purchase  books  are 
the  general  ledgers,  and  back  of  them  the  cost  system. 
Immediately  behind  the  freight  department  is  the  sales 
department,  and  back  of  that  the  "material"  depart- 
ment. This  office  as  a  whole  forms  a  corner  of  the  fac- 


ACCOUNTING    PRINCIPLES 


tory  building.  There  are  private  entrances  into  the  fac- 
tory from  both  the  superintendent 's  office  and  the  ' '  mate- 
rial" section. 

T^XAMPLES  of  layout  which  illustrate  the  best  prin- 
JL-J  ciples  of  arrangement  in  the  accounting  room,  anp 
secure  the  highest  degree  of  efficiency  in  work. 

The  accounting  department  is  within  sight  of  every- 
body, and  each  man  is  placed  nearest  the  section  that  he 
most  frequently  comes  in  contact  with,  irrespective  of 
the  progress  of  work  within  the  accounting  department 
as  a  whole.  This  is  an  exceptionally  good  example  of 
accessibility  from  without,  but  the  arrangement  of  the 
department  itself  does  not  favor  continuous  progress  in 


1 

7 

OFFICES 

CASHIER 

fc^-^^'^^'^H 

\—A 

PARTITION 

L^ 

UU| 

*»'\  ^          RAILING              j-'****'  S^~H 

HJLUD^DD^D 

•s;  — 

FILING                                ACCOUNTING     DEPARTMENT 

min  n  DDDDD 

ROOM 

FIGURE  XI:  This  layout  is  planned  for  continuity  of  work  in  the 
accounting  department.  From  the  cashier's  office  all  documents  take  a 
zig-zag  course  to  the  rear  of  the  office  where  the  filing  department  is  located 

one  general  direction.  Mail  is  opened  in  the  rear  and 
orders  are  taken  to  the  front  for  entry  on  the  books. 
They  are  then  returned  to  the  order  department  on  the 
other  side  of  the  room. 


OFFICE    ARRANGEMENT 69 

It  is  not  unusual  to  find  the  accounting  room  focusing 
round  one  man.  Such  a  department  in  one  office  (Fig- 
ure X)  faces  the  manager  in  the  farthest  corner.  Two 
doors  lead  from  his  private  room,  one  directly  into  the 
accounting  department,  and  the  other  into  the  general 
office. 

The  cashier  is  located  at  the  entrance,  and  the  man- 
ager can  step  from  one  door  into  the  accounting  depart- 
ment and  from  there  into  the  cashier  s  cage.  From  his 
other  door  he  can  step  into  the  general  office.  Every  part 
of  this  general  office  leads  either  into  the  chief's  private 
room  or  into  the  accounting  department.  The  files  and 
stenographers  are  in  a  separate  space. 

Probably  one  of  the  simplest  illustrations  of  a  pro- 
gressive plan  of  arrangement  is  an  office  which  is  di- 
vided by  a  long  aisle  (Figure  XI).  The  cashier  occu- 
pies the  first  space  on  the  right  of  the  entrance,  and 
opposite  is  the  reception  room.  Back  of  the  cashier  come 
various  private  offices,  and  on  the  other  side  of  the  pas- 
sageway is  the  accounting  department.  All  papers  lead 
from  the  executive  interested  to  the  department  head 
interested  and  from  him  directly  to  the  accounting  de- 
partment. 


T^LOOR  space  is  one  of  the  most  important  items  of  non- 
•*•  productive  cost  in  any  business,  and  it  is  therefore  of 
vital  importance  to  prevent  its  waste. 

—A.  T.  Morton 


VII 

THE  BOOKS  AND  THEIR 
ACCOUNTS 

By  Neil  M.  Clark 

WHY  do  you  keep  books? 
A  printing  office  proprietor  faced  this  question 
when  his  bookkeeper  quit  without  notice,  leaving  the 
accounts  in  a  tangle.  Straight  thinking  had  won  for 
the  printer  in  his  business.  He  now  determined  to  think 
out  accounting  to  the  point  where  he  could  check  up  the 
work  in  that  department  as  expertly  as  he  could  in  the 
press  room  and  bindery.  He  glanced  into  the  largest  of 
his  three  mysterious  books.  Here  a  page  assembled  his 
dealings  with  a  paper  house ;  farther  on  with  a  customer ; 
again  with  the  type  foundry.  Evidently,  the  bookkeeper 
had  sorted  dollars  and  cents  upon  these  pages,  just  as 
compositors  distributed  "a's"  into  one  compartment  in 
the  type  case  and  "r's"  into  the  .adjacent  one.  There 
were  " boxes" — that  is,  pages — for  every  important 
group  of  receipts  or  disbursements.  This  book  was  his 
ledger. 

The  other  two  books  did  not  sort  amounts,  but  merely 
lined  them  up,  one  after  another,  as  the  transactions 
crowded  in  during  the  v  day,  too  fast  to  be  sorted.  ^One 
book  recorded  transactions  involving  cash,  the  other  de- 
scribed all  the  remaining  miscellaneous  items.  An  index 
column  on  each  ledger  page  referred  to  the  v pages  of 
these  books  on  which  the  same  transactions  appeared; 


_  BOOKS    AND    ACCOUNTS  _  71 

and  it  was  evident  that  these  books  carried  the  original 
entries,  being  feeders  for  the  pages  of  the  ledger.  These 
volumes  were  his  ca^hbooj^find  journal.^ 

Puzzling  out  fEesesimple  facts,  it  seemed  to  the 
printer  that  his  two  books  were  merely  records  of  the 
day's  business;  and  that  the  third  book  —  the  ledger  — 
fl1ft«.n»fj  fl,wfly  small  details  --and 


brought  the  business  to  a  sharp  focus  which  showed  his 

The  customer  or  the  court  might  at  any  time  inquire 
into  his  business  transactions  and  ask  :  When  ?  How  ? 
Why?  With  whom?  How  much?  His  cash  book  and 
journal,  the  printer  saw,  would  give  answer.  They 
would  supply  detailed  evidence  of  his  dealings,  witness 
his  claims  and  warn  him  of  bills  falling  due.  First, 
however,  he  would  find  it  convenient  to  consult  the 
proper  ledger  page  as  an  index  to  all  these  day  by  day 
items. 

RECORDING  transactions  in  the  day's  business  and 
focusing  them  periodically  into  balances  which  show 
net  results  is  the  service  rendered  by  books. 

This  book  where  balances  were  struck,  moreover,  could 
answer  the  broad  questions  of  his  business;  the  cus- 
tomer's, "How  does  our  account  stand?"  the  banker's, 
'  *  How  have  your  expenses  run  for  the  last  three  years  ?  '  ' 
and  the  press  credit  man's,  "Is  my  0.  K.  on  your  three 
thousand  dollar  order  warranted  by  your  monthly  busi- 
ness average?"  These  answers  would  have  meant  mak- 
ing up  a  special  statement  based  upon  a  search  through 
many  record  pages,  had  not  his  ledger  pages  freed  every 
transaction  of  detail  and  focused  all  into  such  needed 
totals. 

The  printer  saw  that  it  would  be  of  advantage  to  have 


"72 ACCOUNTING    PRINCIPLES 

his  accounts  so  divided  that  he  could  see  his  sales,  his 
purchases,  his  business  with  the  bank,  his  costs,  his  ex- 
penses and  his  profits  separately.  He  saw  that  his  book- 
keeping plan  might  be  better  adapted  to  these  ends  and, 
calling  in  an  accountant,  he  worked  over  a  standard 
printshop  system  of  accounting  to  suit  his  particular  de- 
sires. He  now  uses  vouchers  and  a  duplicate  check  sys- 
tem, a  cash  book,  a  sales  journal,  several  small  ledgers 
for  special  accounts  and  a  final  general  ledger. 

* '  These  half  dozen  volumes  are  no  mystery  to  me, ' '  he 
declares.  "One  group  of  them  is  my  catch  all,  where  I 
bring  together  all  the  buying  and  selling  transactions  of 
the  day.  The  other  pile — my  ledgers — are  type  cases, 
where  into  one  box  I  toss  my  printing  account  with  the 
real  estate  man,  into  another  my  bills  from  the  paper 
house  around  the  corner.  On  opposite  halves  of  the 
page  I  record  what  value  in  cash,  in  bills  or  in  goods 
is  put  in  and  what  is  taken  out.  At  the  end  of  the  month 
I  add  and  balance,  getting  my  totals  and  finally  ridding 
myself  of  all  details,  except  when  I  want  to  turn  back 
to  the  first  pile  of  books  for  some  special  item.  - 

"I  know  now  that  any  system  of  bookkeeping  merely 
records  and  balances.  By  finding  the  reasons  back  of 
his  books  and  fitting  them  to  his  business,  any  one  can 
take  advantage  of  new  accounting  ways.  Your  nail 
boxes,  your  cracker  boxes,  drug  containers,  jewel  or 
candy  trays,  are  as  apt  comparisons  as  my  type  cases; 
and  the  right  bookkeeping  system  is  just  that  simple  and 
sensible.  The  only  ^  rule  I  have  pasted  up,  besides  my 
type  case  comparison,  is  "credit  on  the  right  side  what 
goes  out,  debit  at  the  left  what  comes  in." 

Accounting  is  simply  a  method  which  hard  headed 
business  men  have  worked  out  for  recording  and  balanc- 
ing what  comes  in  and  what  goes  out  in  the  transaction 


BOOKS    AND    ACCOUNTS 


73 


of  their  business.  When  our  business  ancestors  found 
themselves  thumbing  through  their  trade  diaries  dozens 
of  times  a  day  in  search  of  various  dealings,  they  de- 


INVOICE  REGISTER 

DATE 

REC'D 

^ 

NAME 

F 
AM 

DLL 
OUNT 

DATE 
DUE 

rCRMB 

DATE 
PAID 

DISCOUNT 

NET 
AMOUNT      , 

, 

. 

f^fc>l/^"'  RECEIPTS  BOOK 

/ 

^ 

.TCMS                              II  SUNDRIES  II      SCCT*      II 

- 

1      0      I 



«— 

> 

^_ 

**Ai 

\ 

- 

ACCOUNTS  RECEIVABLE 

DATE 

DEBIT 

^ 

AMT. 

DATE 

CREDIT                     S 

AMT. 

^^ 

i-*  •*• 

•^^ 

*•* 

\^~     ^*+Jl 

~^ 

**~***^~S°~**~' 

**~-'^««^X>* 

FORM  I  (next  bottom):    TAw  M  the  simplest  form  of  journal.  FORM  II 

(next  top}:    Receipts  side  of  the  cash  book.     FORM  III  (bottom):    A 

simple  ledger  sheet.    FORM  IV  (top):     The  invoice  register 


veloped  a  further  bookkeeping  process  to  do  away  with 
this  inconvenience.     This  plan  was  to  sort  items  into  a 


74  _  ACCOUNTING    PRINCIPLES  _ 

final  book  which  gave  balances,  noting  in  another  volume 
that  they  were  classifying  each  purchase  or  sale  under 
such  and  such  headings. 

A  separate  book  was  then  found  convenient  for  first 
noting  of  cash  items  only.  These  are  the  three  ele- 
mentary books  of  account:  the  journal,  which  records 
(Form  I)  ;  the  cash  book,  carrying  TEe  original  entries 
of  transactions  involving  cash  (Form  II)  ;  and  the 
ledger,  in  which  accounts  are  sorted  and  balanced  (Form 


Soon  the  journal  was  improved  by  putting  all  like 
items  in  a  column  by  themselves  so  that  you  could  run 
your  finger  down  the  page  and  at  one  time  transfer 
everything  which  belonged  on  one  ledger  page.  One  of 
these  columns  now  and  then  filled  so  quickly  that  it 
seemed  more  convenient  to  give  a  separate  book  to  such 
items.  If  transactions  of  one  kind  were  happening 
simultaneously  at  a  dozen  counters,  special  blanks  were 
designed  to  record  them,  so  that  the  records  could  be  as- 
sembled, sorted  and  more  conveniently  posted  to  the 
ledger. 

It  also  became  more  convenient  to  split  the  "balance" 
volume  into  several  books,  which  today  are  called  "spe- 
cial ledgers"  —  accounts  receivable,  sales,  expenses  and 
the  like. 


A  CCOUNTING  takes  into  consi^^^jnn  fTiTTT/ 

•*».  ble  and  intangible  feature  of  the  business  —  methods 
of  determining  what  accounts  to  debit  ana  credit. 

Accounts  arrange  payments  and  receipts  so  that  you 
may  have  a  record  and  avoid  overlooking  what  is  due  to 
you  or  from  you.  The  cash  payment  and  the  shipment 
you  make  are  both  credited,  the  one  to  cash  and  the  other 
to  merchandise  accounts.  They  are  also  both  debited,  the 


BOOKS    AND    ACCOUNTS 


75 


money  against  the  debt  satisfied  and  the  goods  against 
the  person  who  is  to  pay  you.  The  debit  for  the  mer- 
chandise will  then  warn  you  from  time  to  time  that  its 
money  value  is  owing  to  you.  Its  warning  will  not 
cease  until  you  receive  the  money  for  the  goods  and  by  a 
credit  turn  it  into  a  mere  record. 

All  accounts  are  either  warning  you  of  money  due 
and  owing  or  keeping  a  valuable  record  of  your  dealings. 


WHERE 
TO 
ENTER 

A  CREDIT 
PURCHASE 

OUTGOING  CASH 

ACREDIT 
SALE 

INCOMING  CASH 

REMITTANCE 
CN  ACCOUNT 

CASH 
PURCHASE 

PAYMENT 
ON  ACCOUNT 

CASH 
SALE 

<A> 
BILLOR 
REGISTER 

OF  SALE 

IA> 
BILLOR 
REGISTER 
OF  SALE 

JOURNAL 
OR 
RECORD 

(A) 
CASH   BOOK 

W 

CASH    BOOK 

(A) 
CASH  BOOK 

<B> 
CASH  BOOK 

GROUP 
OF 
BOOKS 

IA> 
INVOICE 
REGISTER 

IB) 
JOURNAL 

JOURNAL 

(B) 
JOURNAL 

<•> 
JOURNAL 

JOURNAL 

<O 
JOURNAL 

LEDGER 
OR 
BALANCE 
GROUP 
OF 

5 

INDIVIDUAL 
LEDGER 

ACCOUNT 

<C> 
INDIVIDUAL 
LEDGER 
ACCOUNT 

1C) 
CUSTOMERS' 
LEDGER 

<C> 
CUSTOMERS' 
LEDGER 

ID> 
ACCOUNTS 
RECEIVABLE 

IOI"' 
ACCOUNTS 

RECEIVABLE 

ID) 
ACCOUNTS 
PAYABLE 

ID) 
ACCOUNTS. 
PAYABLE 

BOOKS 

IE> 
LEDGER 
OASN 
ACCOUNT 

1C) 
LEDGER 
CASH 
ACCOUNT 

5 

LEDGER 
ACCOUNT 

9 

LEDGER 
CASH 
ACCOUNT 

• 
MERCHANDISE 

<D> 
MERCHANDISE 

• 
MERCHANDISE 

(E) 
MERCHANDISE 

FIGURE  XII:  The  books  or  specific  accounts  in  which  to  enter  every 
day  transactions  are  here  shown.  In  receiving  and  paying  out  money, 
whether  the  transaction  is  for  cash  or  credit,  your  first  entry  is  at  "A," 
under  the  proper  heading  at  the  top  of  the  chart,  then  at  "B,"  etc.  When 
distributing  entries  are  made  on  other  books,  the  journal  is  not  used.  Serv- 
ice and  wages  have  special  accounts,  handled  like  merchandise,  which  they 
replace  if  you  sell  only  service 

To  do  this,  they  must  handle  not  only  tangible  money, 
but  also  merchandise,  services,  real  estate,  shares  and 
other  things  that  stand  for  money.  When  accounts  deal 
with  representations  of  cash,  they  assign  to  them  a  money 
value,  and  debit  or  credit  these  values  exactly  as  if  they 


76 ACCOUNTING    PRINCIPLES 

were  currency.  You  debit  a  cash  payment  on  account  to 
cash  and  credit  it  to  whoever  paid  you;  you  debit  the 
value  of  goods  received  on  account  to  merchandise  and 
credit  it  to  whoever  you  must  pay  for  it.  Although  the 
two  debits  represent  entirely  different  things — paper 
currency  and  cloth  goods — they  are  entered  on  the  books 
according  to  a  single  standard,  their  value  in  money. 
The  master  book  or  controlling  volume — the  "general 
ledger" — takes  these  balances  and  boils  them  down  into 
the  concise  totals  which  the  manager  of  the  business  can 
use  at  once  in  his  production  and  sales  planning. 

All  of  these  books  and  transactions,  therefore,  are 
merely  steps  in  this-  recording  and  balancing  process. 
Under  these  two  groups,  books  of  record  and  books  of 
balance,  everything  in  accounting  naturally  falls. 

Any  transaction  of  the  four  classes  (Figure  XII.) 
which  make  up  accounting,  (1)  cash  purchases,  (2) 
credit  purchases,  (3)  cash  sales,  (4)  credit  sales,  must 
have  an  original  record  and  must  finally  filter  in  essence 
into  the  general  ledger.  You  may  note  an  intricate 
transaction  in  several  intermediary  books,  but  these  go- 
betweens  are  merely  screens  through  which  items  pass  for 
finer  sorting. 

The  ledger  "account"  is  merely  an  arrangement  of 
two  sets  of  like  figures — items  which  come  in  and  like 
items  which  go  out — so  that,  knowing  what  you  had  at 
the  beginning,  you  can  by  simple  calculation,  see  just 
what  transfers  have  been  made,  what  is  due  or  owed,  and 
what  is  now  on  hand.  The  printer's  plan  of  deciding 
what  belongs  in  the  left  hand  or  debit  column,  what  in 
the  right  or  credit  column,  was  "debit  what  comes  in, 
credit  what  goes  out."  This  means  that  the  left-hand 
column  must  show  exactly  what  part  of  your  business 
has  been  assigned  to  that  heading  and  the  right-hand 


BOOKS    AND    ACCOUNTS 77 

column  what  definite  value  that  heading  is  giving  up  or 
is  no  longer  responsible  for. 

One  ledger  page  may  be  headed  "cash,"  another  "mer- 
chandise," and  a  third,  "accounts  receivable."  When 
you  sell  a  bill  of  goods  on  credit,  you  credit  merchandise, 
which  surrenders  that  amount  of  stock,  and  debit  ac- 
counts receivable,  which  becomes  responsible.  When 
the  buyer  pays  you,  you  debit  cash,  which  becomes  re- 
sponsible, and  by  a  credit  free  accounts  receivable  from 
its  responsibility.  By  recalling  the  printer's  plan  of 
debiting  the  type  box  when  he  puts  anything  in  and 
crediting  it  when  he  takes  anything  out,  you  can  at  once 
charge  and  credit  correctly. 

TT^OCUSING  transactions  into  balances  is  the  function 
JP  of  the  various  ledgers — a  group  into  which  all  bookt 
except  those  of  purely  original  entry  fall. 

When  you  fill  out  a  voucher  with  a  cash  payment,  or 
write  a  check  and  fill  in  the  stub,  or  enter  a  sale  on  its 
proper  slip  or  ring  up  the  cash  register,  you  are  making 
an  original  entry,  such  as  business  men  generations  ago 
made  in  their  diaries.  At  night  you  assemble,  sort  and 
foot  sales  slips,  add  cash  vouchers,  read  the  register,  car- 
rying your  totals  to  the  various  ledger  columns.  Miscel- 
laneous items  which  do  not  make  up  the  bulk  of  the 
day's  business,  such  as  rent  and  taxe^,  will  go  into  dif- 
ferent columns  of  the  journal.  Where  there  is  an  im- 
portant class  of  such  items,  as  invoices  for  goods  bought 
by  you,  you  may  design  a  special  record  book  for  it, 
which  will  in  fact  be  the  debit  and  credit  columns 
formerly  appearing  in  the  general  journal  under  that 
heading. 

These  totals  which  you  secure  from  the  sales  slips, 
the  cash  vouchers  and  the  automatic  register  after  clos- 


78 ACCOUNTING    PRINCIPLES 

ing  time  are  sorted  out  and  focused  into  larger  totals 
Under  the  proper  headings  on  the  various  ledger  pages. 
The  gist  of  every  transaction  passes  on  to  bigger  head- 
ings, such  as  expense,  cash,  merchandise,  discount  and 
interest ;  and  finally  to  the  last  focus  or.  the  grand  total 
— the  balance  sheet.  From  the  sales  slip  record,  "Two 
sacks  of  Sunset  Flour,  $1.50,"  the  grocer  carries  the 
amount,  $1.50,  as  a  part  of  the  day's  total  to  the  credit 
side  of  the  merchandise  ledger  and  the  debit  side  of  the 
cash  account.  "When  the  monthly  balance  is  taken,  this 
item  is  entirely  without  individuality  in  the  general 
entry  "Total  Sales,  $4,120.12." 

|Where  a  purchase  or  sale  is  made  on  credit,  you  may 
need  something  more  definite  than  a  sales  slip  record,  by 
which  to  follow  up  the  collection  or  payment  of  the  bill, 
the  taking  of  a  discount  or  the  payment  of  interest.  This 
is  easily  done  by  giving  each  creditor  or  credit  customer 
a  ledger  page  so  that  you  may  at  all  times  know  sepa- 
rately his  exact  responsibility  to  you  and  yours  to  him. 
From  your  original  entry,  the  bill  of  sale  or  purchase  in- 
voice, you  will,  therefore,  post  each  credit  sale  or  pur- 
chase to  its  proper  page  in  your  customers '  ledger  or 
purchase  ledger  (Form  IV).  You  can  then  focus  the 
total  purchases  or  sales  under  the  proper  headings  with- 
out the  identifying  names.  When  a  customer  has  his 
$1.50  purchase  of  flour  charged,  you  note  his  responsi- 
bility, $1.50,  on  his  page  in  the  customers'  ledger,  enter 
that  amount  as  a  part  of  the  total  shown  to  be  due  on 
the  "accounts  receivable"  page,  and  on  the  proper  "mer- 
chandise" page,  see  that  a  $1.50  credit  is  entered,  show- 
ing that  amount  of  stock  surrendered  (Figure  XIII). 

Some  businesses  use  a  filing  card  for  each  individual 
credit  sales  account  and  others  a  series  of  loose  leaf 
ledger  pages.  The  routine  is  the  same — posting  of  the 


BOOKS    AND    ACCOUNTS 


79 


*  . 


80 ACCOUNTING    PRINCIPLES 

sale  from  the  bill  or  sales  slip,  the  debit  to  the  cus- 
tomer on  his  individual  card  and  the  credit  to  liim  when 
he  pays;  with  the  proper  entries  to  merchandise,  ac- 
counts receivable  and  cash.  The  card  or  loose  leaf  sys- 
tem is  easily  expanded  or  changed  to  suit  your  individual 
needs,  and  is  especially  adaptable  to  small  or  irregular 
accounts  and  to  the  business  where  many  bookkeepers  are 
required  on  the  accounts  at  one  time. 

It  is  a  common  practice  to  handle  the  accounting  of 
a  business  without  other  books  than  this  ledger  of  charge 
accounts,  the  purchase  ledger,  the  cash  book,  sales  slips 
and  invoices.  Profits,  expenses,  the  balance  sheet  and  the 
present  worth  of  the  company  are  not  given  by  these  ac- 
counts. Such  a  system  is  not  complete ;  a  general  ledger 
is  necessary  to  round  out  your  business  information. 
This  final  ledger  focuses  upon  one  page  your  total  mer- 
chandise received  and  sold;  on  another,  your  accounts 
payable;  on  a  third,  your  accounts  receivable,  and  on 
other  pages  your  cash  totals,  your  various  groups  of  ex- 
penses and  whatever  other  items  are  desired;  it  gives  a 
close  check  on  your  physical  inventory  and  keeps  you  ap- 
prised of  your  expenses,  profits  and  standing.  The 
principle  is  simple — debit  against  credit  with  the  record 
of  all  business  transactions  and  a  balance  struck  under 
the  headings  that  are  important  to  you. 

The  general  ledger  focuses  the  financial  secrets  of  the 
business.  It  is  an  epitome  of  the  whole  business  and  like 
the  store-keeper's  purchase  ledger  belongs  only  in  the 
hands  of  the  proprietor  or  a  responsibile  head  book- 
keeper, while  the  other  accountants  can  give  their  full 
attention  to  the  one  or  two  volumes  in  their  charge. 

In  almost  any  business  one  or  more  special  books  can 
be  devised  for  the  sake  of  convenience  in  separating  or 
following  certain  classes  of  transactions.  The  manufac- 


__  BOOKS     AND     ACCOUNTS  _  81 

turer  or  dealer  who  makes  many  purchases  will  use  an  in- 
voice register  (Form  IV)  where  he  keeps  track  of  bills 
for  purchases  until  they  are  checked  with  the  goods  and 
paid.  Should  the  original  bill  be  lost,  the  register  tells 
the  accountant  when  to  forward  a  check  in  order  to  take 
the  discount.  Where  bills  are  few  and  easily  borne  in 
mind,  however,  they  are  first  checked  against  the  new 
stock,  then  entered  in  a  ledger  and  finally  placed  in  a 
tickler  file  under  the  discount  date. 

If  cash  transactions  are  numerous  you  may  avoid  the 
transfer  of  details  by  keeping  a  daily  cash  sheet  or  a 
system  of  petty  cash  vouchers  from  which  totals  only  are 
posted  to  the  regular  cash  book.  Other  memoranda,  in 
book  form,  are  often  kept  about  notes  payable  and  notes 
receivable.  The  register  where  checks  are  listed  as  is- 
sued, is  now  usually  replaced  by  a  plan  of  making  car- 
bon copies  of  all  checks  and  posting  to  the  ledger  cash 
and  other  accounts  from  these  slips. 


r 


"TROUBLE  entry  fully  performs  the  recording  and  the 
JL/  balancing  functions  —  single  entry  books  cannot  be 
balanced,  and  possess  no  quick  test  for  accuracy. 


Such  impersonal  accounts  as  merchandise,  expense, 
profit  and  loss,  occur  only  in  what  is  termed  double 
entry  bookkeeping.  A  store-keeper  found  a  five  dollar 
bill  by  his  counter  and  was  puzzled  over  the  necessary 
bookkeeping  entries;  it  was  evident  that  cash  should  be 
debited  but  without  other  entries  that  would  make  hia 
profit  for  the  day  seem  deceptive  —  would  make  it  ap- 
pear that  his  average  selling  price  was  more  liberal  or 
his  expense  less  than  was  the  fact.  Chance,-  not  sales, 
deserved  to  be  credited.  You  hand  your  monthly  rent  to 
the  landlord  and  credit  cash,  but  your  books  tell  only 
half  the  story  if  you  neglect  to  debit  the  cause  —  your 


82 'ACCOUNTING    PRINCIPLES 

rent  account.     Double  entry  meets  this  need. 

When  you  make  single  entry  of  a  transaction — when 
you  keep  purely  single  entry  books — you  do  not  split  up 
a  transaction.  You  disregard  chance,  rent,  merchandise, 
accounts  payable,  and  keep  only  personal  accounts — 
what  you  owe  and  pay  others ;  what  others  owe  and  pay 
you.  In  case  of  a  dispute  over  your  rent  for  the  past 
year,  you  might  have  to  pick  out  the  rent  payments 
from  among  purchases,  wages  and  miscellaneous  cash, 
items.  What  slight  additional  work  double  entry  causes, 
it  is  likely  to  save  in  the  end.  While  on  many  unusual 
items  double  entry  would  require  entries  on  two  ledger 
pages  as  against  one  in  single  entry,  by  adding  the 
credit  slips,  you  can  handle  fifty  credit  sales  by 
a  single  entry  on  each  of  fifty  customer  cards, 
together  with  only  two  additional  entries — one  total  to 
accounts  receivable  and  another  crediting  merchandise. 
Many  more  or  less  incomplete  forms  of  double  entry  are 
in  use,  however,  carrying  such  of  the  elementary  im- 
personal accounts  as  are  essential.  A  simple  but  com- 
plete double  entry  system  is  likely  to  be  more  valuable 
to  the  man  who  wishes  to  progress  solidly  in  his  business. 

Cost  accounting  merely  carries  further  one  phase  of 
double  entry  bookkeeping,  that  of  keeping  accounts  with 
things  as  well  as  persons.  In  organizing  your  cost  ac- 
counting, you  merely  reserve  a  ledger  page  or  account 
for  each  department  or  division  of  the  total  cost  which 
seems  significant.  Your  scheme  of  division  is  elastic  and 
can  follow  the  departments  in  the  store,  the  individual 
products  of  the  factory,  or  costs  that  go  into  office 
operation,  farming  or  contract  work.  When  you  know 
what  a  line  of  goods  or  a  class  of  work  is  worth,  you 
can  prevent  a  blind  cut  in  price  and  reassure  yourself 
about  the  daily  tendencies  of  your  business. 


BOOKS    AND    ACCOUNTS 


In  a  Kansas  hardware  store,  where  old-fashioned  book- 
keeping methods  were  continued  because  seemingly  in- 
expensive, the  proprietors,  facing  an  unfavorable  year, 


HOW  THE  TWO  ACCOUNTING 
METHODS   COMPARE 


SINGLE  ENTRY 

I.  You  can  get  a  profit  and  loss 
statement  from  single  entry  ac- 
counts by  detailed  work,  but  you 
cannot  check  your  net  profit  nor 
show  which  lines  pay  best. 

II.  By  counting  or  valuing  your 
impersonal  items  physically,  you 
can  get  a  statement  of  assets  and 
liabilities. 

III.  Single  entry  furnishes  no 
adequate  check  upon   the  accu- 
racy of  your  bookkeeping. 

IV.  Single  entry  ledger  pages 
are  restricted  to  personal  head- 
ings.   You  cannot  keep  imperson- 
al or  nominal  accounts  without 
extra    detail    and    even    partial 
double  entry. 


V.  The  accuracy   of  postings 
can  be  checked  only  by  cumber- 
some methods. 

VI.  Present   worth,    stock  on 
hand,  general  expense  and  factory 
costs  are  not  available  under  the 
single  entry  bookkeeping  system. 


DOUBLE    ENTRY 

I.  You  can  get  a  profit  and  loss 
statement  from  the  books,  can 
check  it  and  show  the  sources  of 
gain  or  loss. 


II.  Double  entry  focuses  natu- 
rally into  a  balance  sheet  with  no 
necessity  of  an  actual  count. 

III.  The   various   accounts  in 
double  entry  work,  including  bal- 
ance sheets  and  profit  and  loss 
statements,  prove  your  work. 

IV.  Double  entry  allows  per- 
sonal, real  and  nominal  accounts 
showing  not  only  the  party  to  the 
transaction,  but  the  complete  ex- 
change and  the  division  of  price 
into   whatever    costs,    expenses, 
profits,  and  markups  are  desired. 

V.  Trial     balances     regularly 
prove  your  postings. 

VI.  Double  entry  will  conven- 
iently furnish  the  figures  which 
establish  loss  in  case  of  fire  or  burg* 
lary   as  weii  as  definite  cost  and 
expense  totals  and  statistics. 


gave  orders  to  discontinue  one  of  the  departments.  An 
ambitious  employee  in  the  unlucky  department  asked  per- 
mission to  have  the  expenses  of  that  section  kept  sepa- 


84 ACCOUNTING    PRINCIPLES 

rately.  The  result  not  only  showed  that  his  department 
was  a  profit-maker,  but  induced  the  proprietors  to  extend 
the  cash  book  and  journal  sheets,  giving  columns  for 
receipts  and  disbursements  by  departments  throughout 
the  store.  The  general  expenses  are  apportioned  among 
the  different  sections  and  losses  as  well  as  profits  are 
thus  localized. 

Modern  bookkeeping  is  built  around  this  idea  of  test- 
ing the  various  parts  of  business  so  that  your  shop  or 
store  may  be  expanded  in  profitable  directions,  and  any 
sign  of  sick  business  can  be  cured  before  it  spreads  to 
serious  dimensions. 

When  you  install  a  new  set  of  books  or  make  over 
your  old  system,  therefore,  study  your  business  care- 
fully and  guide  yourself  not  by  the  forms  of  bookkeep- 
ing routine,  but  by  the  principles.  Aim  to  secure  the 
least  involved  system  which  gives  you  absolute  accuracy, 
promptness  and  the  figures  on  which  you  must  build  for 
success.  Look  beyond  the  forms  and  get  records  that  are 
accurate,  balances  that  clear  your  vision  of  details  and 
spotlight  the  particular  totals  which  prove  your  success, 
your  mistakes  and  your  standing,  with,  finally,  such  sta- 
tistics as  give  you  a  picture  of  your  tendencies. 


HHHE  ways  of  judging  your  business,  past,  present  and 
A  future,  are  many  and  devious.  In  fact,  to  judge  your 
business  fairly,  you  must  review  the  past,  know  the 
present,  and  judge  the  future  from  what  you  have  done  and 
what  you  are  doing,  coupled  with  a  careful  survey  of  the 
field  in  which  you  operate. 

— Henry  Clews 

Founder.  Henry  Clews  &  Company 


VIII 

HOW  TO  HANDLE  PURCHASE 
ACCOUNTS 

By  J.  M.  Cobb 

A  STONTSHED  to  learn  that  he  had  not  earned  his 
<L\.  bonus,  although  he  was  positive  that  he  had  done  a 
bigger  and  better  business  than  ever  before,  the  manager 
of  the  furniture  department  in  a  large  city  store  de- 
manded a  minute  examination  of  the  records.  This 
brought  to  light  the  fact  that  the  department  was 
charged  with  dining  room  furniture  of  a  certain  make 
to  the  extent  of  $2,000,  which  had  been  paid  for,  but 
neither  ordered  nor  received.  Further  developments 
showed  that  a  clerk  in  the  accounting  department  was  in 
collusion  with  the  manufacturer  of  these  goods. 

It  had  been  the  custom  in  the  store  to  pass  all  in- 
voices to  the  receiving  clerk  and  department  manager  to 
be  checked,  before  they  reached  the  accounting  room. 
The  invoice  clerk  took  advantage  of  this  lax  system  to 
help  himself  and  his  friend,  the  furniture  manufacturer, 
to  a  considerable  sum  of  the  company's  money.  He 
merely  added  a  figure  to  both  the  amount  and  quantity 
of  the  bill,  which  already  bore  the  0.  K.  of  the  proper 
departments,  and  the  auditor  in  due  time  passed  it  for 
payment  without  hesitation. 

Such  a  thing  could  not  have  happened  had  a  proper 
method  of  handling  purchase  accounts  been  in  use.  The 
store  system  was  thoroughly  overhauled  and  thereafter 


86 ACCOUNTING    PRINCIPLES 

the  trusted  mail  clerk  was  instructed  to  use  a  safety 
punch  to  indicate  on  every  invoice,  when  it  arrived,  the 
full  amount  of  the  bill,  regardless  of  whether  or  not  it 
was  correct. 

REGISTRY  of  each  invoice  on  its  receipt  prevents  its 
possible   loss  and  the  failure  to  take  discounts; 
the  voucher  method  of  making  payments  on  account. 

To  avoid  the  possible  loss  of  invoices  and  the  conse- 
quent loss  of  discount,  every  bill  should  be  sent  immedi- 
ately upon  its  receipt  to  the  accounting  department, 
where  it  is  given  a  number  and  entered  with  the  details 
necessary  for  its  identification,  on  the  invoice  register. 
The  amount,  nature  and  price  of  the  goods,  together 
with  the  date  when  payment  is  due,  should  be  indicated 
in  the  columns  provided.  The  invoice  or  its  copies  may 
then  be  sent  to  the  proper  departments  to  be  checked. 
The  register  indicates  the  approach  of  the  date  when 
payment  must  be  made,  and  a  delayed  or  lost  invoice 
can  be  traced  through  the  departments  which  have 
handled  it  and  recovered  in  time  to  save  the  discount  by 
prompt  settlement. 

In  any  except  a  small  business,  a  suitably  arranged 
voucher  system  is  probably  unequalled  for  the  payment 
of  bills.  It  serves  six  distinct  purposes : 

In  the  first  place,  it  is  the  most  satisfactory  method 
for  systematizing  the  course  of  a  bilj  from  its  receipt 
to  its  payment,  for  it  compels  every  bill  to  go  through  a 
certain  regular  procedure. 

Second,  it  affords  opportunity  for  approval  of  every 
bill  by  the  auditor  and  the  manager  or  proprietor,  thus 
preventing  any  payment  from  being  made  without  your 
knowledge  and  sanction. 

Third, — and  this  is  its  primary  function — it  serves 


PURCHASE    ACCOUNTS 


87 


88 ACCOUNTING    PRINCIPLES 

yon  as  a  ledger  account  with  yonr  creditor,  obviating  the 
necessity  of  having  on  the  ledger  the  account  of  every 
seller  from  whom  you  buy. 

Fourth,  it  acts  as  a  distribution  ledger,  every  ex- 
penditure being  distributed  to  its  proper  charge  account. 

Fifth,  when  returned  by  the  seller,  the  voucher  serves 
as  a  receipt.  Since  the  check  number  may  be  put  on 
the  voucher,  the  creditor  receipts  also  for  the  medium 
through  which  payment  was  made. 

Sixth,  it  binds  together  all  data  bearing  on  your  firm's 
transactions  with  any  house  from  which  it  buys. 

Distribution  of  items  to  their  proper  charge  accounts 
may  be  made  on  and  posted  from  the  voucher  itself.  One 
objection  to  this,  however,  is  the  fact  that  it  makes 
public  to  a  certain  extent  matters  with  which  your  firm 
only  is  concerned. 

To  remedy  this  fault,  the  distribution  slip  shown  in 
Form  I  is  used.  These  slips  should  be  put  up  in  pads 
and  may  be  of  just  sufficient  size  to  accommodate  the 
names  of  the  accounts  to  which  the  voucher  is  to  be 
charged  and  the  amount  chargeable  to  each.  The  voucher 
clerk  fills  in  a  slip  for  each  voucher  and  indicates  what 
the  bill  is  for. 

"Where  the  number  of  operating  or  other  accounts  to 
be  entered  is  large  or  the  distribution  intricate,  it  is  well 
for  the  clerk  to  have  before  him  a  tray  of  rubber  stamps 
with  the  names  of  each  of  the  general  accounts  and  if 
possible,  each  of  the  sub-accounts.  With  a  little  prac- 
tice he  can  handle  these  very  quickly.  The  slip  is  at- 
tached to  the  invoice,  which  is  then  ready  to  have  the 
voucher  drawn  for  payment.  j 

The  voucher  can  be  of  simple  design,  as  shown  in 
Form  II.  The  body  of  the  voucher  should  contain  only 
such  a  brief  synopsis  as  will  identify  the  account,  with- 


PURCHASE    ACCOUNTS 


89 


out  specifying  quantities  or  prices,  thus  avoiding  unde- 
sirable publicity.  If  a  single  invoice  is  vouchered  it  is 
necessary  to  state  only  the  date  and  amount  and  the  in- 
voice number.  If  more  than  one  invoice  are  covered,  they 
should  be  listed  separately  and  the  total  extended.  If 
any  deductions  are  made,  these  should  be  shown.  In  the 
case  of  a  statement,  where  one  or  more  invoices  are 
omitted,  their  dates  and  amounts  should  be  shown. 


WORK  OFTHE 

ACCOUNTINGS 

DEPARTMENT 


PURCHASE 
ACCOUNTS 


AUDITING  OR  VOUCHERINQ  INVOICES 


ENTRY  AND  DISTRIBUTION 
ENTERING  ON  I 
VOUCHER          -^   BALANCING 
REGISTER 

"  POSTING  TOTALS  TO  GENERAL  LEDGER 


CHECK  DRAWN 
FROM  VOUCHER 


ENTRY  ON  CHECK  RECORD 


ENTRY  ON 
VOUCHER  REGISTER 


ENTRY  ON  CASH  BOOK 


PAYMENTS      4 


TOTAL  DISTRIBUTION 
POSTED  TO  GENERAL 
LEDGER 


SALES  ACCOUNTS 
FINANCIAL  ENTRIES 


FIGURE  XIV:     This  chart  outlines  the  duties  of  the  accounting  depart- 
ment and  especially  the  divisions  into  which  the  work  on  purchase  accounts 
naturally  falls 

Form  III  is  a  loose  leaf  voucher  register  designed  par- 
ticularly for  record  of  vouchers  and  distribution  of  en- 
tries to  meet  the  requirements  of  corporation  accounting 
where  a  large  number  of  accounts,  both  general  and  sub- 


90 ACCOUNTING    PRINCIPLES 

sidiary,  have  to  be  considered  in  distributing  the 
amounts.  Columns  are  provided  for  miscellaneous  gen- 
eral ledger  items,  for  a  miscellaneous  ''accounts  receiv- 
able" ledger,  and  such  other  sub-ledger  or  account  as 
may  be  used.  Additional  columns  may  "be  added  as 
desired.  On  the  other  side  are  columns  with  the  gen- 
eral captions  "Construction,"  "Equipment"  and 
"Operating,"  and  a  fourth  similar  column  for  any  spe- 
cial purpose. 

Postings  to  the  register  are  made  from  the  voucher  or 
distribution  slip  and  thence  direct  to  the  subsidiary 
books.  The  advantages  of  this  register  form  are  that 
it  is  very  compact',  makes  a  comparatively  small  record 
book,  is  simple  and  will  accommodate  a  wide  classifica- 
tion of  accounts.  It  does  away  with  a  multitude  of  col- 
umns, which  are  awkward  to  use  and  subject  to  error. 

The  voucher,  when  registered,  should  be  so  marked, 
and  certified  by  the  auditor.  If  the  approval  of  the 
head  of  the  department  is  required,  it  should  receive 
his  signature  and  go  from  him  to  the  final  official,  who 
approves  it  for  payment.  Stripped  of  all  papers,  the 
bare  voucher  is  then  sent  to  the  treasurer  for  payment. 

Remittances  may  take  the  form  of  a  check,  in  which 
case  the  payee  receipts  the  voucher.  A  great  deal  of 
work,  however,  is  saved  and  a  better  record  obtained  by 
converting  the  voucher  itself  into  a  voucher  check.  For 
this  purpose  a  stamp  similar  to  this  is  used: 


THE  CITY  NATIONAL  BANK 

Will  pay  this   voucher  when   properly   receipted. 
No.  .  .  .  Treas. 


A  safety  punch  should  mark  in  the  amount  to  prevent 
alteration.      The   counter    signature   of   the   president, 


PURCHASE    ACCOUNTS 


91 


JJL 


Li 


s  o 

5     < 

2    S 

ii 

u       O 
i       * 


^ 


•2w«^ 


s 


92 ACCOUNTING    PRINCIPLES 

when  required,  is  already  on  the  voucher  when  approved 
for  payment,  and  is  not  again  necessary  as  it  would  be 
if  a  check  were  issued. 

It  is  a  good  plan  to  prepare  all  vouchers  at  the  end  of 
the  month  so  that  only  one  voucher  is  necessary  to 
cover  the  entire  monthly  account  of  any  one  payee.  All 
invoices  or  bills  which  must  be  paid  promptly  during 
the  current  month,  to  take  advantage  of  cash  discounts, 
can  be  sent  to  the  voucher  clerk  bearing  a  sticker  with 
the  word  "Rush,"  printed  in  red.  Let  it  be  a  rule  that 
these  be  vouchered  immediately. 

HANDLING  purchase  accounts  without  use  of  a  vouch- 
er simplifies  the  routine  of  payments  in  a  medium- 
sized  business  and  keeps  a  constant  check  on  errors. 

In  the  small  business,  a  voucher  system  may  be  too 
cumbersome.  A  small  department  store  operating  twelve 
distinct  departments  has  a  simpler  system  which  has 
proved  successful.  This  business  pays  most  bills  usually 
weekly,  taking  advantage  of  all  possible  discounts. 

When  the  invoice  is  received,  it  goes  first  to  the  ac- 
counting department,  where  a  form  is  stamped  on  it  con- 
taining spaces  to  record  " entered, "  "checked,"  "com- 
pared," "corrected"  and  "paid."  It  is  then  given  a 
serial  number  which  is  recorded  with  a  numbering  ma- 
chine both  in  the  upper  right-hand  corner  and  also  after 
the  word  entered.  This  number  identifies  the  invoice  all 
through  the  accounting  process.  Before  being  checked 
for  corrections  it  is  entered  in  the  loose-leaf  purchase 
journal  (Form  IV). 

In  addition  to  the  details  of  the  invoice  given  on  the 
left  page,  the  form  contains  columns  on  the  opposite 
page  for  departmental  distribution.  At  the  end  of  the 
month  the  totals  only  of  each  of  the  departmental  col- 


PURCHASE    ACCOUNTS 93 

umns  are  posted  to  the  general  ledger  as  a  charge  to 
each  of  these  departments  and  a  corresponding  credit 
given  the  purchase  account.  After  the  invoice  has  been 
checked  in  the  receiving  room  and  the  proper  depart- 
ment, it  is  returned  to  the  accounting  room,  where  it  is 
filed  alphabetically  preparatory  to  payment. 

Checks  are  written  direct  from  the  invoice.  In  this 
way,  attention  is  immediately  called  to  any  notations 
concerning  errors,  corrections  or  claims.  In  remitting, 
the  checks  are  accompanied  by  the  statement  voucher 
(Form  V)  on  which  are  listed  all  invoices  covered  by 
the  check  with  their  designating  numbers,  deductions 
and  corrections.  Carbon  copies  of  these  statement 
vouchers  are  filed  alphabetically  and  may  be  tipped 
together  in  exact  date  order  under  each  seller's  name. 

By  this  method  all  statements  covering  the  entire  ac- 
count with  any  one  seller  are  together  in  such  shape  as 
to  serve  all  the  purposes  of  his  purchase  ledger  account. 
The  invoices  themselves  are  stamped  "Paid"  and  filed 
numerically  for  reference. 

The  statement  vouchers  are  checked  against  the  orig- 
inal entries  in  the  purchase  journal.  The  date  of  pay- 
ment is  entered  in  the  '  *  When  Paid ' '  column,  in  red  ink, 
so  that  the  items  remaining  unpaid  are  more  easily  de- 
tected when  taking  off  a  balance  proof.  The  checks  for 
paying  are  put  in  pads  and  numbered  serially.  As  filled, 
they  are  entered  in  the  check  register  shown  in  Form  VI. 
Columns  are  provided  for  the  notation  of  discount  and 
other  deductions  from  the  gross  amount  of  the  invoice. 
The  form  also  covers  the  entire  banking  record. 

An  exact  list  of  all  unpaid  bills  is  readily  obtained  at 
any  time  by  listing  and  adding  the  items  not  yet  entered 
in  the  "When  Paid"  column  of  the  purchase  journal. 
The  total  proves  the  purchase  account  in  the  trial  balance 


94 ACCOUNTING    PRINCIPLES 

at  the  end  of  the  month.  As  the  bills  are  usually  paid 
each  week,  a  practice  is  made  of  proving  the  purchase 
account  thus  every  week,  after  the  checks  for  that 
week  are  made  out.  In  this  way  any  error  is  quickly 
discovered  in  a  list  of  several  hundred  bills,  without  the 
necessity  of  waiting  for  the  monthly  trial  balance. 

After  the  purchase  journal  is  proved  against  the  pur- 
chase account  on  the  general  ledger  the  record  of  pur- 
chases is  complete.  It  has  been  made  entirely  without 
the  aid  of.  a  purchase  ledger  and  at  the  same  time  with 
all  the  desired  results  both  in  general  and  in  detail  even 
to  the  trial  balance  of  this  section  of  the  accounting. 
There  has  been  no  posting  of  either  individual  invoices 
or  checks.  This  has  been  done  entirely  in  monthly  totals, 
eliminating  a  large  amount  of  work  with  a  corresponding 
saving  in  expense. 


A/fANY  business  men  are  never  happy  unless  they  have 
1  A  a  finger  in  every  detail  of  their  organization.  This  is 
not  executive  control.  It  is  executive  interference,  and  it 
has  very  far-reaching  results  in  any  business.  It  robs  the 
departmental  managers  of  responsibility  and  initiative. 

System  is  the  soul  of  business  and  is  the  living  spirit  of 
any  concern  whether  large  or  email.  I  believe  that  the  busi- 
ness executive  should  systematize  everything  down  to  the 
smallest  detail.  It  is  the  small  details  in  business  which 
are  so  apt  to  be  overlooked;  and  yet  at  the  end  of  a  year,  they 
have  a  way  of  affecting  profits  to  a  very  material  extent. 
But  executive  care  for  details  is  entirely  different  from 
interference  in  details. 

— H.  W.  Hall 

Managing  Partner,  Wellington  and  Ward 


IX 

*     HOW  TO  HANDLE  SALES 
ACCOUNTS 

By  William  E.  Wilson 
Consulting  Accountant 

WHILE  the  order  clerk  who  makes  out  the  dupli- 
cates of  sales  orders  on  various  forms  for  the 
different  departments  is  usually  a  part  of  the  accounting 
force,  yet  the  first  actual  accounting  work  in  connection 
with  a  sales  order  is  after  the  goods  have  been  shipped. 

Attached  to  the  shipping  clerk's  receipt  is  his  copy 
of  the  original  order  checked  and  corrected  to  show 
exactly  what  goods  were  shipped.  The  office  copy  of  the 
original  order  is  then  turned  over  to  the  billing  clerk, 
who  makes  out  a  bill  against  the  customer.  In  cases 
where  the  items  vary  from  the  original  order,  explan- 
ation is  given  of  the  corrections  or  shortages.  This  bill 
is  made  in  duplicate.  One  copy  with  one  of  the  shipping 
receipts  goes  to  the  customer.  The  other  goes  to  the 
bookkeeper. 

It  is  common  custom  for  the  billing  clerk  to  keep  a 
record  of  his  billings  and  to  turn  over  the  total  each  day 
to  the  bookkeeper  for  purposes  of  comparison. 

Entry  of  the  sales  is  made  by  the  bookkeeper  in  two 
ways.  The  first  entry  is  on  a  register  of  invoices  ren- 
dered (Form  I),  the  totals  of  which,  when  posted  to  the 
sales  account  in  the  general  ledger,  constitute  a  record 
of  the  sales  and  also  of  the  "  accounts  receivable. "  The 
second  entry  is  in  the  customers'  ledger,  which  is  fre- 


ACCOUNTING    PRINCIPLES 


quently  in  the  form  of  a  loose-leaf  book  (Form  II)  o? 
card  index  system,  a  separate  card  or  page  being  pro- 
vided for  each  customer.  The  total  of  the  debit  side  of 
these  customers'  records  must  equal  the  totals  of  the 
debit  side  of  the  "accounts  receivable "  account  in  the 
general  ledger. 

When  letters  containing  money  in  any  form  are 
opened,  the  amounts  received  are  noted  on  the  letters 
accompanying  the  remittances  and  the  money  can  im- 
mediately be  prepared  for  deposit.  This  is  usually  the 
first  duty  after  the  opening  of  a  mail.  The  deposits  are 
made  up  and  forwarded  to  the  bank  and  the  amount 
entered  on  the  stub  of  the  check  book  and  also  in  the 
cash  book,  from  which  the  totals  of  deposits  are  daily 
posted  to  the  debit  side  of  the  bank  account  in  the  gen- 
eral ledger. 

l/i  NTRIES  and  books  necessary  for  properly  recording 
-L^  sales — routine  work  of  the  accounting  department 
and  the  right  original  entry  and  balancing  forms. 

The  next  duty  in  connection  with  the  receipt  of 
moneys  is  to  list  the  receipts  on  the  daily  cash  sheet 
(Form  III).  There  can  be  as  many  amount  columns  on 
this  cash  sheet  as  there  are  departments  under  which 
sales  are  to  be  divided.  The  receipts  are  itemized  on 
the  sheet  to  show  the  name  of  the  remitter,  the  invoice 
or  character  of  purchase  that  the  remittance  was  in- 
tended to  cover,  character  of  funds  by  which  payment 
was  made,  and  other  memoranda  needed  for  reference. 

The  totals  from  these  cash  sheets  are  daily  carried  for- 
ward to  their  equivalent  columns  in  the  regular  cash 
book,  from  which  receipts  on  account  are  posted  to  the 
credit  side  of  the  "accounts  receivable"  account  in  the 
general  ledger.  From  the  cash  sheets  are  also  posted  the 


SALES    ACCOUNTS 


97 


6.3 


9 


98 


ACCOUNTING    PRINCIPLES 


credits  to  the  individual  accounts  in  the  customer's 
ledger,  or  if  duplicate  bills  are  used  instead  of  ledger 
cards  or  sheets,  these  are  filed  among  the  paid  accounts. 
The  use  of  the  purchase  invoice  or  voucher  register 
and  distribution  sheets,  of  the  sales  order  record,  cus- 
tomers* ledger  and  cash  book  eliminates  to  a  great  ex- 


WORKOPTHE 
ACCOUNTING 
DEPARTMENT 


PURCHASE  ACCOUNTS 


SALES 
ACCOUNTS 


COPY  Of  SALES  ORDER  CM tCRID  WITH  SHIPMENT 
COMES  TO  ACCOUNTING   DEPARTMENT 
BILL  MADC  OUT  AND  MAILED 

REGISTER  or  invoices  RENDERED 

ENTRY  MADE  FROM  CARBON  OF  BILL  TO 
CUSTOMER'S  LEDGER 

TOTALS  POSTED  TO  GENERAL  LCDGIRj 


•f   AMOUNT  ENTERED  ON   LETTER 

I     AMOUNTS  LISTED  AND  MADC  UP  ON  DEPOSIT  BLIP 
\     TOTAL  ENTERED  IN  CASH  BOOK 

I    CREDITS  POSTED  TO  CUSTOMER'S  LEDGE* 
TOTALS  POSTED  TO  GENCRAL'UCDQEK 


I   CAPITAL  STOCK 

eoRRECTioiror  ACCOUNTS 

<    CAPrrAL.NTR.W.D,V,DC«D. 
I    RELATING  TO  STOCK  AND  MERCHANDISE 
^ACCOUNTS  PAYABLE  AND  RECEIVABLE 


FIGURE  XV:     The  work  of  the  accounting  department  having  to  do  with 

sales  and  financial  entries  is  given  here.      The  latter  entries  are  relatively 

infrequent  but  important,  and  are  generally  made  through  the  journal 

tent  the  need  of  a  journal,  the  postings  to  the  general 
ledger  being  made  directly  from  the  above  named  rec- 
ords. There  are,  however,  certain  entries  that  cannot 
properly  find  a  place  in  any  of  these  subsidiary  records 
and  for  these  a  journal  becomes  necessary  (Form  IV). 
The  first  of  these  are  financial  or  organization  entries. 


SALES    ACCOUNTS 


99 


f 


Is 


l 


it 


15 


it 

- 


100 ACCOUNTING    PRINCIPLES 

They  relate  to  the  financial  transactions  on  which  the 
business  is  founded,  the  credit  or  liability  account,  under 
which  the  issue  of  capital  stock  is  placed,  the  original 
cash  account  before  the  funds  are  transferred  to  the 
bank  accounts,  the  issue  of  bonds  or  mortgages  or  other 
funded  debt,  and  the  original  purchases  of  real  estate 
or  other  large  purchases  not  properly  distributed 
through  the  voucher  register. 

Another  class  of  accounts  that  usually  require  jour- 
nalizing are  those  relating  to  debit  and  credit  obligations 
in  the  form  of  promissory  notes.  The  general  ledger 
contains  a  "notes  payable "  account  and  a  "notes  re- 
ceivable" account.  When  a  note  is  given  by  the  busi- 
ness in  payment  for  a  purchase,  a  journal  entry  is  made 
which  debits  "accounts  payable"  and  credits  "notes 
payable. ' ' 

In  the  same  way,  when  a  customer  gives  a  note  in  pay- 
ment for  a  purchase,  a  journal  entry  is  made  which  cred- 
its "accounts  receivable"  and  debits  "notes  receivable." 
In  both  of  these  cases  the  individual  accounts  on  the 
subsidiary  records  are  balanced  by  the  notes. 

When  you  give  or  take  a  promissory  note,  you  pay  or 
receive  interest,-  which  is  really  wages  for  the  use  of 
money.  Assume,  for  instance,  that  you  give  John  Jones 
your  note  to  run  three  months  at  6  per  cent  for  goods 
whose  value  is  $200.  You  include  the  sum  you  will  have 
to  pay  for  interest  in  the  amount  of  the  note,  making  a 
total  of  $203.  The  transaction  appears  in  the  journal  as 
follows : 

Notes  Payable  to  Sundries $203.00 

Mdse.   account $200.00 

Interest       3.00 

While  entries  of  notes  payable  and  receivable  pass  to 
the  general  ledger  through  the  journal,  yet,  as  a  matter 


SALES    ACCOUNTS 101 

of  convenience  and  to  permit  a  more  complete  record 
of  such  transactions,  a  "notes  payable  and  receivable" 
record  book  is  used.  This  is  a  specially  ruled  book  in 
two  parts,  one  for  notes  payable  and  the  other  for  notes 
receivable  (Form  V).  The  notes  as  issued  or  received 
are  entered  in  this  record  and  space  is  provided  for  full 
details  concerning  the  notes,  the  bank  at  which  they  are 
payable  and  the  date  on  which  they  are  due.  By  means 
of  this  record  or  through  a  tickler  device  the  attention 
of  the  bookkeeper  is  called  to  notes  a  few  days  before 
they  become  due. 

Subsequent  to  the  original  organization  or  capital  ac- 
count entries  there  may  be  other  financial  entries  that 
require  journalizing.  New  stock  or  bonds  or  mortgages 
may  be  issued  to  obtain  increased  capital;  the  funded 
debt  in  the  form  of  bonds  or  mortgages  will  be  canceled 
by  payment ;  dividends  to  the  stockholders  will  be  issued ; 
a  reserve  fund  may  be  established  or  other  transactions 
take  place  requiring  the  opening  of  new  ledger  accounts 
and  posting  from  journal  entries.  Depreciation  of  plant 
and  equipment  is  a  credit  entry  which  always  reaches  the 
ledger  through  the  journal. 

While  the  correction  of  accounts  can  usually  be  made 
by  the  use  of  debit  and  credit  memoranda  in  the  sub- 
sidiary records,  yet  when  such  corrections  are  unusual 
they  also  require  special  journal  entries. 


business  was  less  competitive  than  it  is  today, 
business  men  were  satisfied  to  have  an  analysis  of  their 
financial  records  made  once  a  year,  and  not  until  that  analysis 
was  complete  had  they  any  real  idea  of  their  financial  con- 
dition, or  the  results  of  the  year's  working.  Under  modern 
competitive  conditions,  such  a  condition  of  affairs  is  becoming 
less  and  less  possible. 

—Edward  Wade 


REPORTS  THAT  GUIDE  THE 
BUSINESS 

By  J.  M.  Cobb 

R  A  DUALLY  the  executive  is  getting  away  from  the 
idea  that  efficient  control  of  his  business  necessi- 
tates constant  personal  supervision  of  details.  The  ten- 
dency is  rather  to  bring  those  matters  which  demand  his 
attention  to  him  in  summarized  form,  to  concentrate  his 
work  at  his  own  desk  instead  of  requiring  that  he  go  to 
the  source  of  his  problems  and  draw  his  information 
from  constant  personal  investigation  in  the  various  de- 
partments. Many  a  business  man  spends  ten  hours  a 
day  keeping  in  touch  with  details  which  a  few  concise 
reports  would  give  him  in  one-fifth  of  that  time. 

Based  on  neither  judgment  nor  guess-work,  such  re- 
ports afford  an  accurate  means  for  promptly  correcting 
errors  or  extravagances  in  policies  and  methods,  check- 
ing the  accumulation  of  otherwise  inevitable  losses,  and 
quickly  developing  plans  which  results  have  shown  to  be 
profitable.  The  value  of  the  periodical  statement  no 
longer  lies  merely  in  the  fact  that  it  tells  the  merchant 
or  manufacturer  that  his  business  has  made  or  lost  so 
much  during  the  year  and  that  he  is  in  sound  financial 
condition  or  on  the  verge  of  bankruptcy.  It  does,  in- 
deed, show  the  net  worth  of  the  business  and  its  financial 
condition,  but  of  infinitely  greater  value,  it  tells  which 
operations  are  being  carried  on  at  a  profit  and  at  what 


BUSINESS    REPORTS IPS 

margin,  so  that  the  more  profitable  lines  may  be  retained 
and  the  less  profitable  discarded ;  further,  it  shows  which 
lines  are  causing  a  loss  in  time  to  apply  the  remedy. 

In  his  daily  reports  the  business  man  ordinarily  needs 
to  know  the  following  things: 

(1)  Total  Sales. 

(2)  Total  Receipts. 

(3)  Total  Purchases. 

(4)  Cash  on  Hand  or  in  the  Bank. 

(5)  Maturing  Notes  Payable. 

(6)  Maturing  Notes  Receivable. 

This  material  can  be  given  conveniently  on  a  single 
card  (Form  I).  No  figure  is  valuable  of  itself  alone. 
Its  value  lies  in  its  relation  to  other  figures  of  its  kind, 
and  for  this  reason  every  report,  daily  or  monthly, 
should  present  records  of  the  corresponding  previous 
period. 

DAILY  and  monthly  reports  which  reveal  the  up  or 
dourn  tendencies  of  a  bufiness,   and    catch  little 
leaks  before  they  have  time  to  do  irreparable  harm. 

Some  men  make  their  daily  reports  extend  far  beyond 
this  simple  accounting  statement.  One  executive,  for  in- 
stance, has  a  daily  report  of  orders  received ;  another  of 
orders  shipped ;  a  third  showing  the  records  of  the  bill- 
ing department,  with  the  number  of  invoices  made  out 
by  each  operator;  a  fourth  from  the  correspondence  de- 
partment. The  number  of  labor  and  departmental  re- 
ports may  be  multiplied  indefinitely  for  the  purposes  of 
different  officials,  and  the  character  of  each  business  will 
determine  how  many  such  records  are  needed. 

Monthly  reports  are  most  valuable  from  the  execu- 
tive's point  of  view,  because  they  cover  a  period  exten- 
sive enough  to  allow  satisfactory  comparisons,  and  show 


104 


ACCOUNTING    PRINCIPLES 


tendencies  and  conditions.  Such  reports  should  by  all 
means  show  the  financial  condition  or  balance  of  your 
business  up  to  date,  the  trend  of  profit  or  loss  and  its 
sources,  the  collections  and  obligations  falling  due 
shortly,  and  essential  details  of  assets,  liabilities  and  in- 
ventories. 

The  basis  of  the  monthly  report  is  the  trial  balance. 
The  accounts  listed  on  it  are  analyzed  so  as  to  show  in 
detail  the  causes  which  have  produced  the  results  pre- 
sented on  the  balance  sheet.  A  little  care  in  the  ar- 
rangement of  accounts  on  the  ledger  will  facilitate  the 
taking  of  the  trial  balance  and  the  arrangement  of  it  in 
such  shape  that  the  executive,  even  though  inexpert  in 


DAILY  F 

?EPO 

RT 

DATE 

RECEIPTS 

LAST 
YEAR 

bDIS- 
unsE- 
IENTS 

YEAR 

BALANCE 

LAST 
YEAR 

SALES 

LAST 
YEAR 

BILLS 
PAY- 
ABLE 

LAST 
YEAR 

BILLS 
RECEIV 
ABLE 

LAST 
YEAR 

FORM  I:     This  daily  report  card  gives  the  information  necessary  in  a 

moderate  sized  business.     The  card  contains  thirty-one  lines  and  is  used 

for  one  month 

accounting  details,  may  readily  understand  its  signifi- 
cance. The  asset  accounts  should  appear  in  the  first 
part  of  the  ledger  and  the  liabilities  in  the  last  part. 
Between  these  two  general  divisions  the  expense  and 
revenue  accounts  should  be  grouped.  Each  class  is  to  be 
kept  distinct  from  the  others. 


BUSINESS    REPORTS 105 

Fixed  assets,  representing  investments  in  plant,  build- 
ings or  machinery  in  a  manufacturing  business,  as  well 
as  real  estate  investments,  fixtures,  furniture  and  other 
such  items  in  the  case  of  a  merchant,  are  easily  learned 
in  accurate  accounts  at  the  end  of  any  month.  This  is 
also  true  of  cash,  accounts  receivable  and  similar  liquid 
assets.  Current  outstanding  accounts  are  subject  to  a 
deduction  for  possible  losses,  but  this  amount,  instead 
of  being  distributed  on  the  basis  of  semi-yearly  percent- 
age, can  with  fair  accuracy  be  apportioned  every  month. 

Liabilities  in  most  businesses  can  be  ascertained  with- 
out difficulty.  In  the  case  of  items  which  accrue  at  long 
intervals,  such  as  taxes  and  insurance,  a  monthly  pro- 
portion can  be  accurately  determined  and  included  in 
the  current  accounts  of  any  month,  so  as  to  show  a  com- 
plete statement  of  liabilities. 

The  greatest  obstacle  to  contend  with  in  preparing 
monthly  reports  is  the  inventory  account  of  goods,  mer- 
chandise, unfinished  work  and  other  items  of  supplies 
and  material.  There  are  three  ways  of  determining  fluc- 
tuations in  these  accounts. 

In  the  first  place,  an  actual  inventory  may  be  taken 
every  month.  There  is  in  many  businesses  a  legitimate 
objection  to  this  because  the  conduct  of  business  is  more 
or  less  disturbed  at  the  inventory-taking  dates. 

If  possible,  the  stock-keeping  system  should  be  ar- 
ranged on  the  plan  of  a  perpetual  inventory.  This  is 
entirely  feasible  in  most  lines,  and  accurate  results  can 
be  secured  at  a  minimum  of  clerical  expense.  Some  re- 
tail businesses,  however,  which  carry  a  multitude  of 
small  articles  in  broken  packages,  find  the  perpetual  in- 
ventory plan  of  stock-keeping  impracticable,  because  the 
clerical  work  involved  renders  the  expense  prohibitive. 

In  businesses  where  it  is  not  advisable  to  have  a  per- 


106 ACCOUNTING    PRINCIPLES 

petual  inventory,  or  go  over  the  stock  frequently,  the 
monthly  variations  in  inventory  value  may  be  based  on 
estimates.  You  can  determine  this  value  in  the  following 
way:  Add  to  the  inventory  which  closed  the  preceding 
month  all  purchases  made  during  this  month.  The  result 
is  the  total  of  all  stock  which  was  in  your  store.  To  find 
the  amount  remaining,  simply  deduct  the  purchase  price 
of  goods  sold,  which  you  get  by  subtracting  from  total 
sales  the  total  amount  of  mark-up  on  the  goods  sold — an 
average  percentage  being  the  basis  for  this  figure.  Re- 
duced to  dollars  and  cents,  this  method  is  as  follows : 

Inventory     (estimated  January  31)     ....     $20,000 
Purchases  for  February 23,000 

Total  stock  in  store  during  February      .     .     .     $43,000 
Gross  sales  for  February      ....     $33,000 
Estimated  mark-up  (33£%)      .     .     .       11,000 


Purchase  value  of  goods  sold  .     .     .     $22,000      $22,000 


Estimated  inventory    (February  28th)    .     .     .     $21,000 

While  this  method  is  not  absolutely  accurate,  the  results 
are  sufficiently  close  to  the  actual  figures  to  be  relied  on. 

In  a  manufacturing  business  in  which  a  comprehen- 
sive cost  accounting  system  is  used,  this  difficulty  in  as- 
certaining inventory  value  is  entirely  overcome,  because 
as  a  part  of  such  system  an  exact  running  account  of 
the  value  of  unfinished  work  and  supplies  has  to  be 
maintained. 

Presentation  of  the  information  shown  on  a  financial 
statement  in  such  a  manner  that  a  knowledge  of  account- 
ing is  not  necessary  to  comprehend  it  is  important. 
Many  business  men  conducting  large  and  successful  busi- 
nesses, and  many  bankers  and  financiers  eminently 


BUSINESS    REPORTS 


107 


skilled  in  financial  matters,  although  good  business  men 
and  good  bankers,  do  not  know  enough  about  account- 
ing to  understand  why  accounts  payable  show  on  the 
credit  side  of  the  ledger  and  accounts  receivable  on  the 
debit  side.  In  such  cases  an  intricate  statement  is  not 
fully  understood  by  those  who  should  profit  most  by  it 
and  merely  defeats  its  own  purpose.  Comparisons  with 
other  periods,  and  percentage  figures  connected  with 


STATEMENT  OF  FINANCIAL  CONDITION 

JUNE30 
1812 

JULY  31 
1812 

INCREASE 

DECREASE 

RESOURCES 

PLANT  AND  MACHINERY, 

PATENTS.    GOOD  WILL.  ETC. 

SUPPLIES  AND  UNFINISHED  GOODS 

ACCOUNTS  RECEIVABLE 

BILLS  RECEIVABLE 

CASH 

TOTAL  ASSETS 

LIABILITIES 
ACCOUNTS  PAYABLE 

BILLS  PAYABLE 

UNPAID  PAY  ROLLS 

RESERVE  ACCOUNTS 

CAPITAL  STOCK 

SURPLUS 

TOTAL  LIABILITIES 

FORM  II:     This  sheet  shows  a  simplified  method  of  making  out  slate- 
ments  of  the  financial  condition  of  your  business 

profit  and  loss  do  more  than  any  array  of  figures  stand- 
ing alone,  no  matter  how  impressive. 

Another  mistake  commonly  made  is  the  presentation 
of  results  in  too  detailed  a  form,  so  that  the  salient  fea- 
tures do  not  stand  out  with  sufficient  clearness.  It  is 
best  to  have  first  of  all  a  general  statement  of  your 


108 


ACCOUNTING    PRINCIPLES 


financial  condition  (Form  II),  in  which  details  have 
been  boiled  down  to  comprehensive  totals.  The  general 
statement  can  be  accompanied  and  supplemented  by 


MONTHLY  STATEMENT  OF  PROFIT  AND  LOSS 

JUNE  30 
1912 

%  OF 
TOTAL 

JULY  31 
1912 

•;  OF 

TOTAL 

IN- 
CREASE 

DE- 
CREASE 

EARNINGS 

NET  SALES 

CASH  SALES 

MISCELLANEOUS  REVENUES 
TOTAL  EARNINGS 

PURCHASES 

%  OF 
EARN 
INGS 

%.OF 
EARN 
INGS 

INVENTORY  ADJUSTMENT 

ADVERTISING 

SELLING  EXPENSES 

GENERAL  EXPENSES 

RESERVE  FOR 

DEPRECIATION 

BAD  ACCOUNTS 

TAXES  AND  INSURANCE 
TOTAL  EXPENSES 
NET  EARNINGS 

FORM  III:     The  monthly  statement  of  profit  and  loss,  made  up  from  the 
trial  balance,  shows  the  net  result  of  operations  for  the  period 

other  reports  showing  each  particular  with  greater  de- 
tail. One  report  may  show  the  detailed  sources  of  rev- 
enue; another  the  details  of  expense.  In  this  way  the 
executive  grasps  at  once  the  general  condition  and  the 
results  of  the  month's  operations,  while  supporting  de- 
tails come  readily  from  the  additional  reports. 

The  profit  and  loss  statement  (Form  III)  is  entirely 
distinct  from  the  statement  of  the  financial  condition. 
The  latter  is  a  snap-shot  of  the  state  of  affairs  at  one 
particular  moment — when  the  trial  balance  is  taken; 
the  former  is  a  summary  of  operations  extending  over 


BUSINESS    REPORTS 


109 


the  month.  For  it  the  sales  and  revenue  accounts  are 
brought  together,  expense  accounts  deducted,  and  the 
adjustment  of  inventory  value  is  added  or  subtracted, 


STATEMENT  OF  QUICK  ASSETS  AND  LIABILITIES 

JUNE  30. 
1912 

JULY  31. 
1012 

INCREASE 

DECREASE 

ASSETS 
CASH 

INVENTORIES 
ACCOUNTS  RECEIVABLE 
SILLS  RECEIVABLE 

TOTAL  QUICK  ASSETS 

LIABILITIES 
ACCOUNTS  PAYABLE 
BILLS  PAYABLE 
UNPAID  PAY  ROLLS 
RESERVE  FOR  BAD  ACCOUNTS 
RESERVE  FOR  TAXES  AND  INS. 

TOTAL  QUICK  LIABILITIES 
NET  WORKING  CAPITAL 
TIXED  ASSETS 
PLANT  AND  MACHINERY 
PATENTS  GOOD  WILL.  CTC 

TOTAL  FIXED  ASSETS 
NET  WORTH 

FORM  IV:      A  statement  like  this  shows  the  quick  assets  sharply  con- 
trasted ivith  liabilities  of  a  similar  kind  and  is  valuable  in  judging  the 
worth  of  the  business 

as  the  case  demands.  Details  of  any  of  these  general 
groups  may  then,  if  desired,  be  exhibited  on  supporting 
statements. 


110 ACCOUNTING    PRINCIPLES 

A  supplementary  report  (Form  IV)  showing  the  quick 
or  liquid  assets  contrasted  with  the  liabilities  falling  in 
the  same  class,  is  exceedingly  useful  as  a  guide  in  finan- 
cing and  as  a  basis  of  credit.  These  items  are  really 
vital  in  any  active  business,  and  the  results  shown  indi- 
cate soundness  or  frailty  financially  just  as  much  as 
does  the  entire  financial  statement.  Many  a  business 
has  failed  because  of  a  disproportionate  relation  be- 
tween its  available  quick  assets  and  its  fixed  investments. 
Furthermore,  a  statement  of  this  kind  is  in  many  in- 
stances the  thing  most  seriously  considered  by  bankers 
and  financiers  in  advancing  credit. 

A  statement  of  liquid  resources  and  debts  may  also  in 
turn  be  made  the  basis  for  an  accurate  statement  of 
financial  requirements  for  the  succeeding  month.  It 
enables  you  to  see  just  what  debts  are  to  fall  due,  meet 
maturing  liabilities  without  embarrassment,  and  avoid 
the  accumulation  of  surplus  or  unemployed  capital. 


I'T'HE  character,  permanency  and  component  policy  of  any 
•*•  large  concern  is  concentrated  in  some  strong  central 
authority.  From  him  emanate  the  policies,  the  ideas,  the 
forces  that  make  the  house.  And  the  house's  policy  is  his 
specific  way  of  doing  things.  This  policy  should  be  instilled 
into  every  individual  in  the  concern,  but  one  man  originates 
it — and  he  must  be  putting  forth  a  new  supply  continuously. 
However  vague  the  policy-maker  may  be  to  the  outsider,  to 
the  business  organization  he  is  very  real  and  definite. 

— F.  J.  Selden 


PART  III- TESTED  SYSTEMS 
FOR  KEEPING  ACCOUNTS 

Keeping-  up  with  New  Methods 

AFTER  forty  years  of  experience,  I  am  con- 
vinced  that  success  in  business  depends  not 
only  upon  natural  ability,  but  upon  a  thorough 
preparation  and  training  in  improved  systems 
and  exact  methods.  This  preparation  is  especial- 
ly valuable  in  these  later  years  when  information 
about  the  organization  and  methods  of  business 
houses  has  become  more  general  and  competition 
more  keen. 

As  in  the  earlier  days,  the  farmer  could  follow 
the  old-fashioned  plow,  mow  his  grass  with  a 
scythe,  and  cut  his  grain  with  a  cradle,  paying 
little  attention  to  the  fertilization  of  his  land  or 
the  science  of  farming,  so  the  business  man  could, 
in  the  crudest  and  most  haphazard  manner,  meet 
the  requirements  of  his  customers  and  make 
money  for  himself.  The  automobile  is  no  further 
removed  from  the  "one-horse  shay"  than  is  the 
merchant  and  manufacturer  of  today  from  the 
storekeeper  and  shop  owner  of  yesterday. 

He  who  hopes  for  success  must  organize,  pre- 
pare, enlist  method  and  science,  if  he  would  live 
upon  the  high  plane  which  business  has  now 
reached. 


A.  C.  BARTLETT 

President,  Hibbard,  Spencer,  Bartlett  and  Company 


XI 

RETAIL  ACCOUNTING 

By  J.  F.  Wenzel 

FOR  the  retail  business  of  almost  any  sort  you  need  a 
simple  and  well-arranged  system  of  accounting 
which  will  enable  you  to  know  at  any  time  just  how  the 
business  is  progressing.  In  a  department  store  it  is 
necessary  to  show  which  department  is  making  money 
and  which,  if  any,  is  losing  money.  Accounts  should  be 
so  arranged  that  the  purchases,  sales  and  cost  of  doing 
business  in  each  department  are  kept  separate,  just  as 
though  each  department  were  a  distinct  business  in  it- 
self. Such  a  check  by  departments  is  almost  equally 
valuable  in  every  retail  shop  and  office. 

Some  merchants  still  keep  their  books  by  single  entry, 
believing  that  double  entry  means  double  work.  But  by 
using  columnar  books  or  loose  leaves  it  is  only  necessary 
to  make  one  extra  posting  to  each  department's  account 
each  month  in  order  to  complete  the  double  entry.  The 
actual  amount  of  additional  work  involved  in  double 
entry  is  scarcely  more  than  5  per  cent.  Yet  double 
entry,  with  its  merchandise  account  and  profit  and  loss 
account,  which  single  entry  cannot  carry,  shows  pre- 
cisely how  the  business  is  progressing  and  provides  for 
comparisons  of  expenses  year  by  year.  Furthermore, 
double  entry  safeguards  against  careless  bookkeeping 
by  bringing  out  mistakes  as  a  difference  in  balancing 


114 BOOKKEEPING    SYSTEMS 

the  books.     Without  double  entry  it  is  impossible  to 
ascertain  whether  books  have  been  correctly  kept  or  not. 
The  following  plan  shows  the  order  in  which  to  place 
your  store  accounts  in  the  general  ledger : 

Cash 

Accounts  Receivable 

Bills  Receivable 

Furniture  and  Fixtures 

Vouchers  Payable 

Bills  Payable 

Reserves  for  Depreciation 

Proprietor's  Investment  Account 

Department  I — 

Inventory 

Purchases 

Freight,  Express  and  Dray  age 

Sales. 

Expense 

Salary 

Advertising 

Interest,  Profit  and  Loss 

(Other  departments  follow  with  the  same  analysis.) 
General  Expense 
General  Salary 
General  Advertising 
Office  Expense 
Office  Salaries 
Delivery  Expense 
General  Profit  and  Loss 

These  accounts  are  kept  on  loose  leaves  or  cards,  so 
that  their  same  relative  position  may  always  be  main- 
tained. 

Every  department  manager  should  be  provided  with 
a  pad  of  triplicate  order  blanks,  on  which  he  specifies 
the  goods  he  wishes  purchased  for  his  department.  He 
keeps  the  triplicate  sheet  as  his  record  and  hands  the 
original  and  duplicate  over  to  the  general  manager  or 
the  buyer  for  approval.  If  approved,  the  original  sheet 


RETAIL    ACCOUNTS 


115 


116 BOOKKEEPING    SYSTEMS 

is  mailed  and  the  duplicate  is  filed  in  the  office  to  await 
the  arrival  of  the  invoice  and  the  goods.  When  orders 
are  given  to  traveling  salesmen  the  order  is  made  out  on 
the  same  form,  and  when  approved,  the  original  is 
handed  to  the  salesman.  These  blanks  are  uniform  in 
size  and  easily  filed. 

HANDLING  purchase  accounts  in  the  retail  store — 
checking  invoices  against  incoming  goods — keeping 
tab  on  the  little  items  of  expense  and  outgo. 

When  the  goods  arrive  they  are  checked  against  the 
invoice  by  the  receiving  clerk  and  in  the  department  by 
the  manager,  who  O.  K's  quantity,  quality  and  price 
charged.  He  places  the  selling  price  on  the  goods  and 
also  on  the  invoice  for  information  of  the  management. 
After  the  bookkeeper  has  figured  the  extensions  and 
footings,  they  are  ready  to  be  entered  on  the  voucher 
form  illustrated  in  Form  I. 

The  voucher  gives  all  particulars  of  the  account  and  is 
made  in  duplicate,  so  that  a  copy  may  be  filed  for  refer- 
ence. The  voucher  itself  is  entered  on  the  voucher  regis- 
ter (Form  II),  which  then  gives  the  necessary  details  of 
settlement.  The  departments  are  charged  with  the  goods 
received  by  entering  the  amount  in  the  distribution  col- 
umns of  the  voucher  register  and  posting  the  total  of 
each  column  to  the  department  purchase  account  at  the 
end  of  the  month.  There  is  no  need  of  keeping  ledger 
accounts  with  creditors  if  this  system  is  used.  Vouchers 
are  dated  ahead  to  the  date  they  are  due  and  filed  in  a 
tickler. 

At  the  end  of  the  month  the  total  of  the  "net  amount" 
column  of  the  voucher  is  posted  to  the  credit  of  the 
"vouchers  payable"  account  in  the  general  ledger,  and 
after  the  amount  of  vouchers  paid  during  the  month, 


RETAIL    ACCOUNTS 


117 


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118 BOOKKEEPING    SYSTEMS 

as  shown  by  the  ' '  vouchers  payable '  '  column  in  the  cash 
journal,  has  been  charged  to  this  account,  it  will  then, 
of  course,  show,  as  a  difference,  the  amount  the  busi- 
ness owes  its  creditors. 

When  the  bookkeeper  comes  to  making  out  the  voucher 
he  refers  to  the  creditor's  folder,  makes  the  proper 
deductions,  attaches  invoices,  letters,  credit  memoranda 
and  bills  of  returns  to  the  voucher  and  hands  it  to  the 
general  manager  or  other  official  in  charge  for  approval. 
After  this  approval  is  received  the  papers  are  detached 
and  placed  in  the  "Unsettled  Bills"  section  of  the  file, 
and  the  voucher  filed  by  due  date  in  the  voucher  tickler. 

Expenses  of  all  kinds  are  taken  care  of  by  the  "paid 
out  check,"  shown  in  Form  III,  which  must  be  0.  K  'd 
by  the  department  manager.  Freight  and  express,  sal- 
ary and  advertising  items  are  entered  each  day  in  their 
respective  columns  in  the  cash  journal  (Form  IV)  and 
are  then  divided  among  the  different  departments  by 
means  of  distribution  sheets  (Form  V). 

All  the  direct  expense,  such  as  salesmen's  salaries, 
rent,  light  and  insurance,  is  at  once  charged  to  the  de- 
partments that  incur  it.  The  clerks'  salaries  may  easily 
be  divided  from  the  pay  roll  book  each  week ;  rent  should 
be  divided  according  to  floor  space  used;  light  by  the 
number  of  kilowatt-hours  required  in  the  department, 
and  insurance  according  to  the  size  of  the  stock.  Over- 
head expense  items,  such  as  the  proprietor's  salary,  de- 
livery, bookkeeping  and  general  office  expense,  are 
charged  to  general  accounts,,  and  at  closing  time  these 
accounts  are  prorated  and  charged  to  the  departments 
on  the  basis  of  turnover,  or  the  cost  of  goods  sold,  as 
may  be  agreed. 

In  handling  sales  in  grocery,  meat  and  bakery  de- 
partments, which  are  largely  on  a  cash  basis,  and  where 


RETAIL    ACCOUNTS 119 

prompt  service  is  desirable,  cash  registers  can  best  be 
used.  In  other  departments,  the  ordinary  duplicate 
sales  tickets  are  satisfactory.  Each  ticket  should  bear 
the  salesman's  number,  which  may  be  made  to  designate 
both  clerk  and  department  by  having  all  salespeople 
numbered  in  department  I  from  one  to  nineteen,  and  in 
department  II  from  nineteen  to  thirty. 

A  sales  ticket  is  made  out  for  every  sale.  The  amount 
is  also  registered  by  the  clerk  on  a  " record  of  sales" 
card.  The  original  ticket  is  kept  by  the  cashier  and  the 
duplicate  is  given  to  the  customer.  At  the  end  of  the 
day  the  cashier  sorts  the  tickets  by  salesmen's  numbers 
and  turns  them  in  at  the  office,  together  with  the  cash. 
The  bookkeeper  who  usually  audits  the  sales  checks  the 
tickets  with  the  "record  of  sales"  cards  and  then  sep- 
arates cash  from  charge  tickets.  Daily  sales  are  then 
recorded  on  Form  VI,  which  shows  the  daily  cash  and 
charge  sales  of  each  salesman  and  department. 

The  "record  of  sales"  card  may  serve  a  double  pur- 
pose. A  new  one  should  be  given  to  each  clerk  every 
morning.  But  first  the  bookkeeper  should  write  on  the 
back  the  amount  the  clerk  sold  that  day  the  preceding 
year,  to  encourage  an  increase.  These  "record  of  sales" 
cards  are  turned  over  to  the  manager  after  they  have 
been  audited.  They  show  him  at  a  glance  which  clerks 
are  increasing  and  which  are  losing  in  sales. 

The  accounts  with  customers  should  be  kept  in  a  sepa- 
rate ledger  from  the  general  accounts.  The  duplicate 
statement  ledger  is  admirably  suited  for  this  purpose, 
as  the  statements  are  made  out  at  the  same  time  the 
charge  is  entered,  always  ready  to  send  on  the  first  of 
the  month.  The  entries  should  be  made  direct  from  the 
eharge  tickets. 

The  daily  postings  may  easily  be  proved  without  ex- 


120 BOOKKEEPING    SYSTEMS 

tra  labor  by  the  use  of  markers  and  an  adding  machine. 
As  postings  are  made  markers  are  inserted  in  the  ledger 
showing  the  accounts  affected.  Markers  of  one  color  are 


PROFIT  AND  LOSS  STATEMENT,  DEPARTMENT  1. 

SALES. S16.T05.S2 

INVENTORY  (JUNE  30)...  ...6,213.32 


TOTAL  VALUE  RECEIVED -$22.920.84 

INVENTORY  (JANUARY  1). SS. 608.67 

PURCHASES _ 13,073.42 

TOTAL  STOCK  IN  DEPT.  1  (JAN.  1  TO  JUNE  30TH) $10,682.09 

GROSS  PROFIT... .. 4,238.75 

FREIGHT,  EXPRESS  AND  DRAYAGE $215.13 

EXPENSE .722.7* 

SALARY. _ 1.541.24, 

ADVERTISING. 380.85 

INTEREST...  ..425.50 


TOTAL  EXPENSE  DUDUCTIONS $3,285.43.  -  .3,285.43 

NET  PROFIT:..  953.32 


FORM  VII:  This  chart  shows  the  method  of  calculating  profit  and  loss 
from  the  records  which  the  expense  and  merchandise  accounts  on  the  books 

furnish 

used  to  designate  debit  postings  and  another  color  shows 
credits.  In  this  way  many  errors  in  posting  are  located 
at  once,  saving  a  great  deal  of  time  and  trouble  in  taking 
the  trial  balance. 

/^LOSING  the  books  and  finding  the  percentage 
V~/  statistics  which  guide  the  policies  of  the  business  and 
show  where  the  biggest  returns  are  coming  from. 

The  total  charge  sales  for  the  month  are  then  debited 
to  Accounts  Receivable  in  the  general  ledger;  and  the 
amount  collected  on  account  for  the  month,  as  shown 
by  the  accounts  receivable  column  in  the  cash  journal, 


RETAIL    ACCOUNTS 121 

is  credited  to  it,  making  this  account  show  the  total 
amount  due  from  customers.  The  correctness  of  the 
customers'  ledger  should  be  tested  each  month  by  com- 
paring the  total  of  the  balance  with  the  balance  of  the 
accounts  receivable  account.  If  the  accounts  with  cus- 
tomers are  so  numerous  as  to  make  several  ledgers  neces- 
sary, an  accounts  receivable  account  may  be  carried  with 
each  ledger,  making  it  possible  to  prove  each  ledger 
separately. 


INVENTORY  AT  COST  (JANUARY  1) ........... $6,908.67 

PURCHASES ... »_...». 13.073.42 

FREIGHT,  EXPRESS  AND  ORAYAGE.  ......................  .215-13 

18,697.22 

CESS  INVENTORY  AT  COST  (JUNE  1) ... .  . 6.215.32 

COST  OF  GOODS  SOLD . ............  .12.681.90 

GROSS  SALES.  .... „ . ... „  16.702.06 

GROSS  PROFIT.  ........ . . 4.020.18 

PER  CENT 

GROSS  PROFIT  TO  SALES .... ...... 24.  .1 

NET 1! 'I..? _ 5.6 

EXPENSE  TO  SALES . . «•« 

SALARY..  '* »!. .... »•« 

ADVERTISING.  ••_  .'I  _.-_., ..... 2-3 

INTEREST •!._". ...2.8 

TOTAL  EXPENSE  .I'-.'!  _.  ..18.2 


FORM  VIII:     The  approved  method  of  calculating  turnover  on  the  basis 
of  sales  and  finding  valuable  percentages  is  shown  in  this  chart 

To  close  the  books,  after  inventory  is  taken,  the  bal- 
ance of  the  inventory,  sales,  freight,  express  and  dray- 
age  accounts  are  transferred  to  the  merchandise  account. 
The  merchandise  account  is  credited  with  the  new  inven- 
tory, and  it  then  shows  the  gross  profit  of  the  depart- 
ment. This  balance  is  credited  to  the  profit  and  loss  ac- 
count of  the  department,  and  after  the  expense,  salary, 


122 BOOKKEEPING    SYSTEMS 

advertising  and  interest  accounts  have  been  charged 
against  it,  this  account  will  show  the  net  profit  or  loss  of 
the  department.  This,  when  carried  to  the  general  profit 
and  loss  account,  will  show  the  revenue  derived  from  the 
entire  business  (Form  VII). 

At  closing  time  each  department  should  be  charged 
with  interest  on  the  amount  of  capital  used,  and  the  total 
interest  charged  to  all  departments  may  be  credited  to 
the  general  profit  and  loss  account  to  complete  the 
double  entry.  While  this  practice  does  not  decrease  or 
increase  the  earnings  of  the  business,  it  makes  the  net 
profit,  if  any,  represent  the  amount  the  department  made 
over  what  might  have  been  realized  on  the  money  if  it 
had  been  loaned  instead  of  invested. 

As  already  mentioned,  the  general  expense  should  be 
prorated  and  charged  to  the  departments  on  the  basis  of 
turnover.  The  percentage  of  gross  and  net  profits  and 
costs  of  doing  business  should  be  figured  on  the  basis 
of  sales.  (See  Form  VIII.)  Comparative  percentage 
statistics  are  valuable  in  every  business.  With  this 
system  of  accounting,  it  is  easy  to  arrange  a  book  in 
which  results  may  be  recorded  from  year  to  year  for 
comparison  and  reference. 


TV/TORE  than  one  business  has  found  itself  in  the  bank- 
•••  ruptcy  court  through  an  unnoticed  leak  that  had  had 
free  play  during  a  long  period.  The  remedy  for  this  state 
of  affairs  is  an  efficient  system  of  continuous  analysis  of  the 
financial  records  of  a  business. 

—Edward  Wade 


XII 
BRANCH  STORE  ACCOUNTS 

By  C.  A.  Ransom 

TOO  many  and  too  complicated  accounting  forms  in 
the  retail  business  make  accurate  posting  difficult, 
and  involve  too  much  and  too  costly  clerical  labor.  If, 
however,  the  records  used  do  not  furnish  enough  infor- 
mation, one  of  the  branches  of  the  business  will  run  out 
of  suitable  stock  or  fail  to  bring  in  enough  money.  These 
two  things  must  particularly  be  guarded  against  in 
branch  store  management. 

Different  branch  or  ''chain"  stores  use  varying  sets 
of  accounting  forms.  The  details  of  these  forms  are 
fairly  standard,  but  the  number  of  them  differs  widely 
with  the  business  and  the  amount  of  information  desired 
at  the  home  office. 

A  system  which  seems  to  have  neither  too  many  nor 
too  few  forms  is  in  use  by  a  corporation  operating  five 
branch  stores,  catering  particularly  to  the  ten  and 
fifteen-dollar  suit  and  overcoat  trade.  This  company  has 
no  difficulty  in  getting  the  information  needed  for  the 
economical  management  of  its  stores  from  that  pre- 
sented on  five  forms. 

The  first  sheet  (Form  I)  is  the  daily  sales  report.  This 
report  is  the  basis  of  all  branch  store  accounting  sys- 
tems. It  is  the  daily  sales  record  sent  to  the  home  office. 
In  this  system  it  lists  the  various  sizes  of  suits,  as  regu- 


124 BOOKKEEPING    SYSTEMS 

lar,  stout  and  slim,  together  with  the  lot  numbers  and 
the  price  of  each  suit  sold. 

This  report  is  made  out  in  duplicate  by  all  branch 
stores  and  all  furnish  precisely  the  same  information. 
The  condition  of  the  weather  is  exactly  shown.  Temper- 
atures and  rain  or  snowfall  are  given.  As  the  sales 
slips  are  posted  to  this  daily  sales  report,  the  book- 
keeper begins  on  his  report  several  hours  before  closing 
time,  so  that,  as  sales  slips  come  in,  the  final  posting  may 
be  done  up  to  the  closing  hour.  Posting  can  thus  be 
done  partially  by  low-salaried  help  during  spare  mo- 
ments. 

RECORDS  which  keep  the  management  of  a  chain 
of  retail  stores  in  close  touch  with  the  sales,  ex- 
penses and  condition  of  stock  in  each  of  the  branches. 

(At  the  lower  right-hand  corner  of  this  sheet  is  a 
recapitulation  of  receipts  and  disbursements  of  the  va- 
rious kindsvof  suits  and  overcoats.  "A"  indicates  a  $10 
grade,  "B"  $15,  and  "C"  $20.  This  sheet  shows  the 
number  of  garments  on  hand  at  last  report,  receipts 
since  last  report,  sales  for  the  day  the  report  covers, 
and  the  number  of  garments  left  on  hand  that  evening. 

The  financial  condition  of  the  store  is  shown  by  the 
deposit  slips;  where  a  cash  business  is  done,  the  deposit 
slip  for  the  day  must  exactly  balance  with  the  sales  for 
the  day.  Aside  from  the  accounting  value,  this  acts  as 
an  excellent  basis  on  which  to  refuse  credit;  it  is  pos- 
sible for  the  store  manager  to  say  honestly  that  he  is 
obliged  to  account  for  every  suit  sold  by  depositing  the 
price  value  in  the  bank. 

A  transfer  order  blank,  shown  in  Form  II,  is  used  to 
indicate  the  transfer  of  merchandise  from  one  store  to 
another.  It  is  possible,  in  economical  branch  store  man- 


BRANCH    ACCOUNTS 


125 


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126 BOOKKEEPING    SYSTEMS 

agement,  to  run  with  a  comparatively  small  stock,  when 
a  careful  system  of  accounting  for  transfers  is  used.  A 
good  system  of  recording  transfers  makes  this  possible. 
The  form  shown  not  only  lists  economically  the  transfers 
made,  but  has  space  for  any  instructions  regarding  each 
separate  item. 

If  the  manager  of  a  store  finds  his  stock  running  low, 
or  if  he  finds  himself  overstocked  with  certain  garments, 
he  writes  or  wires  the  home  office,  giving  full  informa- 
tion as  to  the  numbers  on  hand.  While  this  information 
is  shown  in  the  above  recapitulation,  yet  it  might  be 
overlooked  by  the  home  manager  and,  for  this  reason, 
branch  managers  are  especially  warned  to  look  out  for 
coming  demands — to  judge  tendencies  which  indicate 
few  or  greater  sales  along  certain  lines. 

Form  III  shows  the  stock  or  lot  sheet.  This  provides 
for  the  listing  of  suits  as  bought  and  sold.  The  balance 
remaining  on  hand  may  be  struck  at  any  time.  The  dif- 
ferent sizes  of  suits  and  overcoats  are  listed,  regulars 
running  from  thirty  to  forty-six,  with  two  spaces  for 
sizes  larger  than  the  forty-six  size.  Stouts  run  from 
thirty-five  to  forty-two,  with  one  extra  space  for  posting 
the  odd  size. 

At  the  left-hand  margin  of  the  lot  sheet  is  an  invoice 
and  daily  inventory  summary. 

Form  IV  is  a  memorandum  form  for  inventory  of  sizes 
on  hand.  It  is  kept  only  for  the  home  office,  so  as  to  de- 
termine what  sizes  are  running  low,  that  prospective 
"outs"  may  be  ordered. 

In  connection  with  the  reports  from  branch  stores, 
which  indicate  what  the  probable  demand  will  be,  this 
inventory  tends  to  prevent  either  an  over-accumulation 
of  odd  sizes  or  running  entirely  out  of  sorts  at  any  store. 

This  matter  of  keeping  the  stock  so  sorted  as  to  pre- 


BRANCH    ACCOUNTS 


127 


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BRANCH    ACCOUNTS 129 

vent  the  accumulation  of  odd  sizes  is  one  always  to  look 
after,  especially  in  branch  store  management.  It  is  no 
uncommon  experience,  even  in  a  single  store,  to  have 
sizes  or  patterns,  or  both,  accumulate  to  an  extent  that 
causes  large  depreciation  loss.  Many  stores  lose  from, 
this  cause  approximately  from  one-half  to  one  per  cent 
of  the  capital  stock.  Constant  reference  to  each  memo- 
randum and  study  of  its  variations  will  effectually  pre- 
vent this. 

Form  V  is  the  final  form  that  is  used  in  this  store.  It 
is  a  summary  of  daily  receipts  posted  from  the  daily 
sales  reports.  Accompanying  each  daily  sales  report  is 
a  duplicate  deposit  slip  showing  in  what  bank  the  daily 
receipts  were  deposited  and  the  amount.  From  the  daily 
sales  report  and  this  accompanying  deposit  slip,-  the  sum- 
mary of  daily  sales  is  posted. 

Best  results  are  secured  from  this  form  by  placing  as 
many  on  a  single  sheet  as  there  are  stores  in  total ;  that 
is,  all  branch  stores  and  the  home  office.  This  sheet, 
consequently,  may  be  as  large  as  eighteen  by  thirty 
inches.  The  sheets  are  kept  in  pad  form,  posted  singly 
and  then  bound  for  reference  in  a  loose-leaf  binder. 
After  sales  have  been  footed,  the  figures  are  placed  in 
a  grand  total  sales  column  at  the  right  of  the  sheet. 


A  THOROUGH  knowledge  of  the  smallest  details  of  one's 
**  business,  well-directed  effort  in  work,  and  the  power 
to  organize  a  business — these  are  the  three  foundation  stones 
of  success. 

—Edwin  A.  Potter 

President,  American  Trust  and  Savings  Bank 


XIII 

MANUFACTURING  AND  SALES 
OFFICE  ACCOUNTS 

By  Neil  M.  Clark 

T~l  ORMERLY  it  took  three  trucks  to  wheel  our  ledgers 
JT  into  the  vault  at  night.  We  turned  a  search-light 
into  the  dark  corners  and  found  that  we  were  a  long  way 
behind  the  time.  We  thoroughly  revised  the  system,  and 
the  first  day  our  new  plan  was  in  working  order  a  single 
man  carried  all  the  books  in  his  arm  at  once." 

The  auditor  of  a  middle  western  factory  gave  this 
account  of  the  great  change  wrought  in  his  system  by  a 
complete  revision  of  bookkeeping  methods. 

Speed  and  accuracy  are  the  key  thoughts  in  the  ac- 
counting system  of  this  concern.  The  company  prac- 
tically combines  manufacturing  and  wholesaling  on  a 
large  variety  of  small  articles.  It  operates  thirty  de- 
partments, sells  to  retailers  direct  instead  of  to  the  job- 
ber, and  handles  directly  its  rather  extensive  advertising 
campaigns.  Twenty  salesmen  are  on  the  road  continu- 
ously. Records  on  sales  require  about  the  same  amount 
of  attention  in  the  accounting  department  as  those  on 
the  manufacture  of  the  product.  Costs  are  accurately 
kept  and  closely  bound  up  with  the  system. 

The  company's  week  ends  on  Friday.  In  spite  of  the 
fact  that  the  product  is  so  diversified  and  the  number 
of  salesmen  and  departments  is  large,  the  management 
has,  on  the  following  Monday,  the  exact  amount  of  the 


SALES    OFFICE    ACCOUNTS 131 

sales  and  purchases  of  all  departments  for  the  previous 
week,  the  sales  of  every  salesman,  and  the  "  figured  net 
profit"  of  the  whole  concern.  A  dozen  men  and  girls, 
not  counting  employees  in  the  billing  department,  take 
care  of  the  entire  routine  of  accounts  and  the  gathering 
of  desired  statistics. 

"POSTING  purchase  accounts  with  a  view  to  securing 
A  the  highest  rate  of  speed  and  the  greatest  degree  of 
accuracy — methods  of  checking  the  figures. 

The  accounting  routine  may  be  taken  to  begin  with 
the  purchase  of  materials.  When  the  invoice  for  a  pur- 
chase arrives  it  goes  at  once  to  a  girl  who  checks  the  ex- 
tensions and  the  total,  so  that  the  purchase  bookkeeper 
receives  the  invoice  correct  as  far  as  extensions  are  con- 
cerned. Invoices  are  entered  alphabetically,  one  after 
the  other,  in  a  purchase  journal,  which  gives  merely  the 
date  of  entry,  the  name  of  the  seller,  the  due  date,  the 
gross  amount,  terms  of  payment,  and  the  number  of  the 
department  to  which  the  purchase  is  charged.  Three 
postings  are  taken  from  this  journal:  first,  to  the  pur- 
chase ledger,  where  the  seller  is  credited;  next  to  the 
bills  payable  book,  and  finally  to  the  distribution  book. 

Loose-leaf  volumes  are  used  throughout  the  establish- 
ment in  preference  to  cards.  The  system  is  so  carefully 
planned,  and  records  reach  the  bookkeepers  in  such  well 
classified  form,  that  three  hundred  and  twenty-five  post- 
ings in  an  hour,  or  an  average  of  five  and  one-half  per 
minute,  are  not  uncommon.  A  five-dollar-a-week  boy 
arranges  the  invoices  or  charge  sheets  for  each  book- 
keeper in  alphabetical  order,  just  as  the  accounts  appear 
in  the  purchase  ledger.  In  the  purchase  journal,  there- 
fore, the  day's  invoices  are  entered  alphabetically,  re- 
sulting in  an  increase  of  about  100  per  cent  in  the  speed 


132 BOOKKEEPING    SYSTEMS 

with  which  postings  are  made  to  the  purchase  ledger. 
The  bookkeeper  simply  props  up  the  journal  in  front 
of  him,  using  his  left  hand  to  turn  the  pages  of  the 
ledger  while  he  posts  and  checks  with  his  right  hand. 

Another  simple  device  for  saving  time,,  derived  from, 
common  sense  rather  than  from  scientific  motion  study, 
is  the  fact  that  the  bookkeeper  posts  from  the  place 
where  he  left  off  recording  invoices  in  the  journal  rather 
than  from  where  he  began.  Starting  at  the  bottom,  he 
works  back  to  the  top,  posting  and  checking  as  he  goes; 
and  naturally  he  also  starts  at  the  back  of  the  ledger 
and  works  to  the  front.  By  the  time  the  right  hand  has 
finished  posting  and  checking,  the  unoccupied  left  hand 
has  lifted  several  pages  and  found  very  nearly  the  place 
for  the  next  posting.  With  practice  the  operation  be- 
comes almost  automatic. 

It  is  impossible  to  attain  the  same  rate  of  speed  in 
posting  from  the  purchase  journal  to  the  other  two  books 
required  for  completing  purchase  entries.  Since  the  in- 
voices are  originally  entered  in  alphabetical  order,  the 
payment  dates  do  not  follow  one  another  in  any  logical 
order,  nor  are  the  purchases  consecutive  with  relation  to 
the  department  concerned. 

Posting  to  the  departmental  distribution  book  is  not 
difficult,  however,  for  it  has  to  be  done  only  once  a  week, 
and  all  departments  are  taken  care  of  on  one  sheet 
(Form  I).  Besides  serving  for  the  proper  distribution 
of  purchases,  this  sheet  is  used  to  secure  a  check  on  accu- 
racy. When  a  bookkeeper  has  finished  entering  the  de- 
tails of  an  invoice  in  the  purchase  journal  he  sends  it  to 
the  department  for  which  the  goods  were  bought.  Each 
department  checks  in  its  own  goods.  The  factory  is  not 
so  large  but  that  one  superintendent  can  take  charge  of 
several  departments,  but  the  records  of  each  one  are 


SALES    OFFICE    ACCOUNTS 


133 


kept  absolutely  separate.  The  receiving  clerk  checks 
the  invoices  first  against  the  copy  of  the  order,  then 
against  the  goods  when  they  arrive.  By  the  end  of  the 
week  the  invoices  in  each  department  are  totaled  and 
compared  with  the  total  charged  in  the  distribution, 
book.  A  mistake  in  posting,  or  the  loss  of  an  invoice 
anywhere  along  the  line,  is  thus  caught  at  once. 

In  paying  its  bills  the  concern  does  not  use  the  in- 
voice, but  gathers  the  necessary  details  from  the  bills 
payable  book,  which  is  posted  from  the  purchase  journal. 
This  book  is  a  loose-leaf  volume  also,  arranged  so  that 
new  sheets  can  constantly  be  added  and  dead  sheets  re- 
moved. Every  future  day  for  three  months  has  one  or 
more  sheets,  arranged  chronologically,  on  which  are  the 


DEPARTMENT  PURCHASE  DISTRIBUTION 


FORM  I:     This  form  is  used  for  the  distribution  of  purchases  to  the  proper 

departments.    Each  department  checks  up  its  own  records  weekly  against 

the  total  shown  in  this  book 

details  necessary  for  the  payment  of  every  bill  due  on 
that  day.  In  the  morning  the  bookkeeper  runs  through 
this  list  and  makes  out  a  remittance  blank  (Form  II) 
for  every  creditor  to  whom  bills  are  owing.  As  many; 


134 BOOKKEEPING    SYSTEMS _^ 

bills  as  possible  are  paid  at  one  time.  The  concern  finds 
that  its  bills  bear  a  great  variety  of  discounts,  and  the 
remittance  sheet  is  ruled  in  such  a  way  as  to  take  care 
of  these.  The  first  column  is  for  the  date  of  the  invoice, 
the  second  for  remarks  or  the  invoice  number,  and  in 
the  next  three  columns  amounts  are  entered  in  their 
proper  place  according  to  the  terms  of  payment.  These 
terms  are  inserted  in  the  box  at  the  top.  Net  amounts 
are  extended  to  the  fourth,  or  total,  column. 

This  bookkeeper  also  makes  out  the  paying  check  and 
sends  it,  with  the  remittance  blank,  to  the  treasurer  to 
be  signed.  The  check  book  serves  as  an  original  entry 
book  of  payments.  Totals  go  from  it  to  the  cash  book 
and  details  are  entered  as  debits  to  the  proper  sellers' 
accounts. 

This  concern  also  keeps  its  sales  accounts  both  speedily 
and  accurately,  and  draws  from  them  a  great  variety 
of  valuable  statistics.  The  invoice  is  made  out  in  dupli- 
cate, the  first  copy  going  to  the  customer,  the  second  be- 
ing the  charge  sheet  from  which  postings  are  made. 

/CHECKING  sales  price  and  figuring  the  profit— 
V_/  using  the  "census  machine"  to  gather  valuable 
statistics  of  sales  by  department  and  salesman. 

From  the  billing  department  the  invoice  reaches  the 
sales  accounts  department,  with  the  items  and  prices 
marked,  but  without  the  extensions.  Here  comes  the 
first  check  to  insure  accuracy.  With  the  use  of  comput- 
ing machines  one  girl  figures  extensions  on  the  invoice 
copy  and  another  on  the  charge  sheet  copy.  The  two 
sheets  are  then  compared  and  they  must  agree,  or  the 
mistake  made  by  one  of  the  girls  must  be  located  at  once. 

Accuracy  being  insured,  speed  again  becomes  the  dom- 
inant consideration.  The  same  boy  who  sorted  the  in- 


SALES    OFFICE    ACCOUNTS 


135 


voices  also  sorts  the  charge  sheets,  separating  them  first 
by  states  to  find  which  bookkeeper  they  belong  to,  and 
next  arranges  alphabetically  the  accounts  for  each  sales 
ledger,  binding  them  in  temporary  covers  to  prevent 


BILLS  REMITTED 
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SCRCP/ 

FORM  II:  This  remittance  blank  goes  uiik  paying  checks.  The  extra 
columns  are  provided  for  the  entry  of  bills  bearing  di/erent  discount  rates 

their  becoming  disarranged.  In  this  form  they  go  first 
to  those  who  figure  the  profit,  next  to  the  ledger  book- 
keepers and  finally  to  girls  who  dissect  and  analyze  the 
statistics. 

Every  article  manufactured  and  sold  by  this  concern 
has  a  number.  Articles  in  Department  I,  for  instance, 
are  numbered  101,  102;  in  Department  XV  they  are 
numbered  1501,  1502,  and  so  on.  Experience  and  care- 
ful statistics  in  the  cost  department  have  taught  the 


136 BOOKKEEPING    SYSTEMS 

management  very  nearly  the  exact  cost  of  every  article. 
These  costs  are  arranged  in  a  profit  and  loss  book  op- 
posite the  number  of  the  article  concerned.  This  book 
is  revised  every  two  or  three  months,  as  new  articles  are 
added  to  the  list  or  old  ones  are  dropped.  A  profit 
calculator  runs  through  this  book  in  connection  with  the 
charge  sheets  and  marks  in  red  ink  on  the  latter  the 
amount  of  profit  and  loss  incident  to  the  bill.  Losses 
are  indicated  by  a  circle  drawn  around  the  amount.  The 
" figured  net  profit"  thus  arrived  at  generally  has  a  per- 
centage of  error  not  greater  than  1  or  2  per  cent. 

The  profit  figurer  catches  large  and  apparent  mis- 
takes. For  instance,  if  an  item  numbered  908  appears 
on  the  charge  sheet  as  selling  for  $2.00,  and  the  cost  of 
the  article  as  shown  by  the  profit  and  loss  book  is  $3.78, 
an  inquiry  is  at  once  sent  to  the  department  or  sales- 
man concerned.  The  mistake  may  be  in  the  number  of 
the  article — perhaps  the  number  should  have  been  809 — 
or  it  may  be  that  the  salesman  or  billing  clerk  made  a 
mistake  in  quoting  or  copying.  At  any  rate,  glaring 
errors  are  caught,  and  the  sales  bookkeeper  receives  his 
charge  sheets  with  practically  no  errors  in  them. 

He  receives  them  also  in  such  shape  that  speed  in 
posting  is  made  possible.  But,  since  he  must  turn  the 
pages  of  both  the  ledger  and  the  charge  sheets,  it  is  not 
possible  for  him  to  post  and  check  quite  so  rapidly  as 
the  purchase  bookkeeper  does.  He  follows  the  same  sys- 
tem, however,  proceeding  from  the  back  of  the  book  to 
the  front,  posting  each  bill  to  its  proper  account  in  the 
loose-leaf  customers'  ledger. 

"When  the  bookkeeper  is  through  with  the  charge  sheets 
a  series  of  valuable  statistics  is  drawn  from  them.  In 
the  first  place,  a  girl  totals  the  sheets  on  the  adding 
machine  to  get  the  grand  total  of  sales  for  the  day. 


SALES    OFFICE    ACCOUNTS 


137 


Another  girl  goes  through  each  book  and,  with  a  card- 
punching  machine,  " spots  in"  the  details  of  each  bill 
on  a  specially  arranged  card  which  shows  the  date,  the 


WtCHCNDI 

WEEKLY  SUMMARY 

MA                                                                                                                       1Q1 

DCPT. 

LAST  WEEK'S 
INVENTORY 

TOTAL 
PURCHASES 

RETURNED 
GOODS 

TOTAL 
SALES 

FIGURED 
NET  PROFIT 

t 

2 

3 

A 

6 

-  —  -—  J 

22 

23 

24 

25 

27 

te 

30 

RETURNED 
GOODS 

TOTAL 
PURCHASES 

LAST  WEEK'S 
INVENTORY 

TOTAL 
STOCK 

TOTAL 
SALES 

FIGURED 
NET  PROFIT 

COST  OF 
GOODS  SOLD 

INVENTORY 
ENDING 

FORM  HI:     This  weekly  summary  card  gives  the  total  of  purchases  and 

tales  and  the  figured  profit  of  all  departments.    It  serves  the  purpose  of 

giving  an  approximately  exact  inventory  each  week 

department  and  salesman  making  the  sale,  its  amount, 
and  the  figured  amount  of  profit  or  loss.  These  cards 
are  run  first  through  an  electric  tabulating  machine  to 


138 BOOKKEEPING    SYSTEMS 

find  the  total  of  sales,  as  a  check  on  the  work  of  the  first 
girl.  The  machine  then  separates  the  cards  in  any  way 
desired — according  to  salesman,  or  department,  or  any 
other  classification,  and  the  total  of  sales  for  that  par- 
ticular classification  is  speedily  found.  A  summary  of 
the  week's  transactions  is  made  on  Form  III.  The  con- 
cern gets  these  required  statistics  for  the  week  in  a  quick 
and  accurate  manner,  and  they  form  a  definite  aid  in 
guiding  the  policy  of  the  business. 


"C^VERY  business  must  have  a  start,  and  as  it  grows  re-or- 
•*~*  ganization  should  be  constantly  resorted  to,  as  it  is  rarely 
that  an  organization  which  will  carry  the  details  of  a  small 
business  will  prove  effective  for  carrying  on  a  larger  one. 
It  is  remarkable  what  an  enormous  amount  can  be  saved  in 
a  manufacturing  business  when  every  detail,  large  or  small, 
is  carefully  watched  through  the  medium  of  an  efficient 
system.  System  is,  in  fact,  the  very  soul  of  business. 

— H.  W.  Hall 

Managing  Partner,  Wellington  and  Ward 


XIV 

SIMPLICITY  IN  BANK 
RECORDS 

By  J.  M.  Cobb 

NATIONAL  banking  requirements  necessitate  so 
many  detailed  records  in  accounting  that  economy 
in  both  the  work  and  the  procedure  is  very  important. 
The  methods  used  by  one  bank  of  the  smaller  class  are 
particularly  worthy  of  the  interest  of  every  official  in 
banking,  trust  and  loan  service,  because  of  the  successful 
attempt  to  eliminate  all  possible  extra  work  and  repeti- 
tion, and  at  the  same  time  keep  the  records  in  such  shape 
that  the  details  can  promptly  be  furnished  when  de- 
manded. 

This  bank,  with  a  capital  of  $50,000,  has  deposits  ag- 
gregating a  quarter  of  a  million,,  divided  into  more  than 
eight  hundred  individual  accounts.  The  loose-leaf  sys- 
tem is  used  in  all  of  the  subsidiary  books,  from  which 
postings  are  made  direct  to  the  ledgers  or  other  books. 
All  items  are  entered  in  detail  on  the  general  ledger,  so 
that  reference  to  tickets  or  other  forms  from  which  the 
entries  were  made  is  not  necessary. 

In  handling  cash,  debit  and  credit  tickets  are  made 
for  all  transactions,  including  credit  remittances  for 
which  drafts  are  drawn.  These  are  entered  on  a  draft 
ledger  (Form  I),  and  the  totals  of  drafts  made  each  day 
are  posted  in  the  general  ledger  to  the  bank  upon  which 
the  drafts  have  been  drawn.  The  total  of  exchange 


140 BOOKKEEPING    SYSTEMS 

as  shown  on  the  draft  ledger  is  posted  to  the  exchange 
account  likewise  as  a  total.  The  total  of  the  drafts 
drawn,  plus  the  exchange,  balances  with  the  total  of 
drafts  issued,  as  shown  on  the  teller's  daily  cash  bal- 
ance (Forms  II  and  III).  The  other  details  as  shown 
on  this  form  will  also  agree  with  the  several  correspond- 
ing details  as  posted  to  the  general  ledger. 

RECORDS  for  the  bank  which  meet  the  requirements 
of  the  law  and  show  the  exact  condition  of  the 
business — how  deposits  and  remittances  are  handled. 

The  bills  and  notes  discounted  are  entered  in  the  dis- 
count ledger  (Form  III),  and  the  total  of  this  agrees 
daily  with  the  debit  shown  on  the  teller's  cash  balance 
sheet,,  thus  proving  that  item.  Only  the  total  of  this 
is  posted  to  the  general  ledger.  Notes  are  then  entered 
in  a  loose-leaf  tickler  and  filed  in  a  pouch  arranged 
according  to  their  maturity. 

When  notices  are  mailed  for  maturing  notes  the  state- 
ments are  made  from  the  tickler  and  then  compared 
with  the  notes  themselves,  thus  avoiding  the  danger  of 
overlooking  any  of  them  or  of  mailing  notices  for  any 
which  have  been  paid  ahead.  This  acts  also  as  a  check 
on  the  notes  themselves  at  all  times.  If  any  note  is 
missing,  attention  is  immediately  called  to  it  and  it  is 
easily  traced  a  week  or  ten  days  before  maturity. 

The  notes  as  a  rule  are  proved  once  a  month  to  see 
if  they  agree  with  the  balance  as  shown  on  the  general 
ledger.  Credit  tickets  are  made  for  all  discounts  paid, 
and  credited  as  a  total  to  the  discount  and  interest  col- 
umn, as  taken  from  the  teller's  cash  balance  sheet. 

All  remittances  of  checks  to  other  banks  are  written 
up  on  a  simple  remittance  blank.  A  carbon  copy  of  this 
is  made,  which  is  filed  in  a  postbinder  and  the  amounts 


BANK    RECORDS 


141 


142 


BOOKKEEPING    SYSTEMS 


of  the  remittance  to  the  different  banks  charged  to  each 
on  the  general  ledger  from  these  carbon  copies.  These 
charges  are  made  as  a  total,  which  should  agree  with 


TELLERS   D» 

THE  FIRST  NATIONAL  BANK  OF 

NORTHFOLK.  w   VA. 
ILVBALANCC                                           DEBITS 

NORTHFOLK 

DATE 

NOTES  018. 

SUNDRY  DEBITS 
GENERAL    LEDGER 

CASH  ITEMS 

^_^ 

CERTIFICATES 
OF  DEPOSIT  PAID 

OR.                        RECAPI 

•ULATIC 

; 

DR. 

CURRENCY 

LECALS  ONES 

AND  TWOS 

COLD 

HALVES 

QUARTERS 

DIMES 

NICKELS  AND 
PFNMira 

CASH  ITEMS 

TOTAL    CASH.        . 

CHECKS    . 

REMITTANCE*  

CERT. 

TOTAL    DEBITS 

FORM  II:    On  this  sheet  are  entered  the  items  which  make  up  the  teller's 
daily  cash  balance.     This  is  one  side  only,  containing  space  for  debit  entries 

the  total  shown  on  the  teller 's  cash  balance  sheet. 

The  individual  ledger  is  balanced  each  day  and  the 
total  of  checks  and  deposits  credited  to  the  individual 


BANK    RECORDS 


143 


deposits  account  on  the  general  ledger  as  a  total;  the 
total  of  checks  and  deposits  taken  from  the  teller's  cash 
balance  sheet  and  the  total  of  the  individual  deposits,  as 


THt  FIRST  NATIONAL  BANK  OF  N 
J105I»1£WJILW.  VA. 

TELLERS  DAILY  BALANCt                                           CREDITS 

ORTHFOLK 

DEPOSIT* 

DEPOSITS 

DRAFTS  ISSUED 

CERTIFICATES   OF 
DEPOSIT  ISSUED 

NOTES  PAID 

SUNDRY  CREDITS 
GENERAL  LEDGER 

DISCOUNT 

CR.              RECAPH 

ULATIO 

*S 

CR. 

BALANCE 
BRO  T  F-WD. 

DCPOB1TB 

CERTIFICATES 
or  or* 

NOTES  PAID 

DISCOUNT.  .. 

SUNDRY 
GEN'L.  LEOG. 

TOTAL  CREDITS 

FORM  1 1- A:     The  reverse  of  the  teller's  daily  cash  balance  sheet  is  here 
shown.     This  furnishes  the  necessary  columns  for  the  entry  of  credits 

shown  on  the  general  ledger,  must  agree  with  the  total 
as  shown  on  the  individual  ledgers  each  day. 

The  adding  machine  is  used  for  all  possible  purposes. 


144  BOOKKEEPING    SYSTEMS 


The  remittances  to  banks  are  first  run  through  the 
machine  to  list  tKe  amount  of  the  checks,  and  afterwards 
the  names  of  the  payers  and  endorsers  are  filled  in  with 
the  typewriter.  This  plan  has  been  found  to  be  both 
more  rapid  and  more  legible  than  pencil  copy. 

After  the  deposit  tickets  and  credit  tickets  are  all 
entered  they  are  filed  at  the  close  of  the  day's  business 
in  a  deposit  ticket  file,  and  at  the  end  of  the  month 
are  bound  and  placed  in  the  vault  for  future  reference 
whenever  necessary. 

In  practical  use  this  system  affords  an  accurate  check 
on  everything  handled.  Much  less  work  is  required 
than  by  posting  every  item  to  one  book  and  then  trans- 
ferring to  another,  in  addition  to  which  the  liability  of 
error  is  very  much  lessened.  The  teller's  daily  cash 
balance  is  in  reality  an  original  entry  without  the  de- 
tails of  the  item. 


CYSTEM  is  to  modern  business  what  lubrication  is  to 
^  machinery:  the  better  the  means  of  lubrication  the 
smoother  and  more  efficient  the  running;  the  better  the  system, 
the  greater  ease  and  dispatch  in  managing  small  details,  and 
the  more  time  for  following  out  the  main  paths  that  lead  to 
success. 

— John  Younger 


XV 

PERSONAL  AND 
PROFESSIONAL  ACCOUNTS 

By  Ernest  A.  Scholz 

ACCURATE  handling  of  accounts  is  relatively  as 
valuable  for  the  records  of  the  farmer  or  the  law- 
yer, the  doctor  or  the  business  man  out  of  hours,  as  for 
the  intricate  operations  of  the  large  store  or  the  complex 
details  of  factory  transactions.  Men  who  have  acquired 
the  habit  of  keeping  personal  expense  accounts  and  have 
developed  that  habit  into  a  definite  system  have  found 
the  satisfaction  in  knowing  these  accounts  worth  many 
times  the  amount  of  attention  required  in  keeping  them 
up.  Furthermore,  the  man  with  an  accurate  statement 
of  his  personal  accounts  before  him  is  prompted  to  watch 
his  expenses  with  greater  care  and  to  cut  out  items  which 
show  actual  waste. 

The  first  step  toward  a  simple  system  for  the  keeping 
of  personal  accounts  is  the  definite  classification  under 
certain  heads  of  the  channels  of  income  and  expense. 
Make  these  divisions  so  general  that  once  the  classifica- 
tion is  determined  any  item  of  income  or  expense  can 
always  be  entered  under  one  of  them.  For  ordinary 
purposes  such  a  list  as  the  following  will  answer  your 
purpose:  salary,  incidental  personal  expense,,  life  insur- 
ance, banks,  rent,  furniture  and  household  furnishings, 
fuel,  light,  household  help  and  daily  household  expenses, 
fire  insurance,  medicines,  vacations,  books,  magazines 


146 BOOKKEEPING    SYSTEMS 

and  newspapers,  charity,  gifts  and  church  donations. 
Other  divisions  may  be  added  to  suit  individual  de- 
mands. Secure  a  small  journal  and  a  ledger  and  open 
an  account  with  each  of  the  classified  heads. 

The  next  step  is  to  deposit  all  income  in  the  bank  as 
soon  as  it  is  received.  This  reduces  all  money  to  one 
source  of  supply  and  furnishes  a  basis  for  accounting 
which  makes  the  work  simple.  Every  one  of  the  accounts 
named  above,,  with  the  exception  of  personal  expenses, 
can  be  paid  by  check.  Thus  a  stub  in  the  pocket  check 
book  furnishes  temporary  registry  of  all  expenses  until 
they  are  posted.  You  may  keep  your  incidental  per- 
sonal expense  account  by  estimating,  at  the  beginning 
of  the  week,  the  amount  necessary  for  this  item  and 
drawing  a  check  payable  to  self  for  the  amount.  Oppor- 
tunity is  thus  given  to  enter  the  total  for  personal  ex- 
pense in  the  check  book  stub,  and  the  record  furnished 
is  approximately  correct.  Of  course,  a  portion  of  the 
amount  thus  drawn  may  be  expended  for  articles  prop- 
erly coming  under  other  heads,  but  unless  the  purchases 
are  of  considerable  value  the  recording  of  them  may  be 
neglected. 

/CLASSIFICATION  of  all  items  of  income  and  outgo 
V^  is  the  first  step  in  keeping  personal  accounts — 
finding  the  headings  that  you  need. 

Once  a  week  the  receipts  and  expenditures  may  be 
posted  to  the  books  in  a  few  minutes'  time  by  simply 
adding  the  amounts  due  to  each  division,  as  labeled  in 
the  check  book  stubs  and  making  the  proper  entries. 
At  the  end  of  the  month  a  trial  balance  may  be  made  up, 
showing  the  condition  of  each  account  for  the  monthr 
as  well  as  the  total  expense  for  personal  and  household 
affairs.  Salary  due,  cash  in  the  bank,  fuel  and  house- 


PERSONAL    ACCOUNTS 147 

hold  goods,  furniture  on  hand,  and  so  forth,  may  be 
considered  assets;  outstanding  bills  for  household  ex- 
penses, and  similar  items,  are  liabilities.  It  may  not 
seem  necessary  to  carry  your  monthly  balance  to  this 
extent,  but  it  is  very  easily  done  and  has  a  definite  value 
for  comparison  from  period  to  period. 

At  the  end  of  the  year  a  final  report  is  taken  from 
the  books,  presenting  the  total  receipts  and  expenditures. 
This  summary  shows  the  expenses  of  each  month,  the 
amount  spent  in  each  division  each  month.  From  this 
concise  summary  much  interesting  and  valuable  infor- 
mation may  be  drawn. 

The  comparison  of  the  figures  with  those  of  other 
years  shows  what  month  and  what  season  demands  the 
greatest  outlay  of  money;  it  permits  you  to  follow  the 
interesting  variations  in  the  actual  cost  of  living;  it 
forms  a  definite  basis  upon  which  to  estimate  the  prob- 
able demands  during  the  coming  year ;  and,  possibly  best 
of  all,  it  shows  where  your  money  goes. 

The  farmer  finds  the  simple  journal  and  ledger  system 
suited  to  his  needs,  but  his  classification  of  accounts  is 
similar  to  that  by  departments  in  a  large  store.  Each 
field  has  its  own  account,  and  all  labor,  fertilizer  or  seed 
used  on  it  are  charged  against  it,  together  with  its  acre- 
age proportion  of  rent  or  taxes  and  interest  on  invest- 
ment. All  product  harvested  from  the  field  is  credited 
to  it  at  the  current  market  rate,  whether  actually  sold 
or  kept  for  home  consumption. 

Two  acres  of  an  Ohio  farm,,  for  instance,  are  given 
up  to  truck  gardening.  Half  is  planted  to  potatoes  and 
the  other  half  to  miscellaneous  vegetables.  When  the 
proprietor  plows  his  garden  or  does  any  work  himself 
he  charges  the  field  with  an  amount  of  wages  equal  to 
what  he  would  have  to  pay  to  get  the  work  done  by 


148      '  BOOKKEEPING    SYSTEMS 

someone  else.  This  farmer's  general  accounts  are  as 
follows:  horses,  poultry,  dairy,  pasture,  wood  lot,  truck 
garden,  potato  field,  meadow,  corn  field  A,  corn  field  B, 
and  miscellaneous.  The  last  account  includes  pleasure 
carriages  and  similar  items  which  can  not  be  charged 
specifically  against  any  one  part  of  the  farm.  Its  total 
is  prorated  yearly  over  the  other  accounts.  This  system 
is  peculiarly  valuable  in  that  it  enables  the  farmer  to 
know  precisely  what  fields  or  crops  are  making  money 
for  him  and  how  much.  When  the  farm  is  rented  on  a 
share  basis,  the  merchant-owner  by  this  plan  can  not 
only  secure  fair  terms,  but  can  trace  the  profit  and  loss 
items  and  help  his  man  bring  the  place  to  success. 

DOCTOR,   lawyer,   dentist   or  farmer — the   profes- 
sional man,  whatever  his  line,  needs  an  accurate 
system  of  accounts  as  the  basis  for  his  charges. 

|By  adding  a  card  ledger  the  doctor  or  lawyer  also  can 
adapt  the  personal  system  to  his  needs.  Each  patient  or 
client  is  entered  on  an  individual  card,  filed  alphabet- 
ically, which  gives  the  date  and  itemized  service,  the 
amount  of  the  bill,  when  rendered,  and  dates  and  cash 
received  in  payment.  Running  from  left  to  right  at  the 
top  of  each  card  is  a  series  of  numbers  from  1  to  31, 
standing  for  the  days  of  the  month.  These  numbers 
serve  as  a  follow-up  for  the  date  when  payment  is  ex- 
pected on  an  open  account.  Clips  of  twelve  different 
colors,  one  color  for  each  month,  complete  the  equip- 
ment. 

Assume  that  Mr.  A.  0.  Smith  receives  professional 
services  on  May  16th,  for  which  the  charge  is  $12,  and 
he  promises  payment  on  or  before  the  first  of  July.  An 
individual  card  is  made  out  for  him  and  filed  under  S. 
The  red  clip  (if  that  is  the  color  denoting  July)  is 


PERSONAL    ACCOUNTS 149 

fastened  to  the  card  over  No.  1,  or  July  1.  When  Mr. 
Smith  pays  the  clip  is  removed.  If  he  does  not  pay  as 
promised  the  clip  calls  attention  to  the  fact. 

The  system  may  at  first  seem  complicated,  but  in  real- 
ity it  is  extremely  simple.  It  serves  the  purpose  of 
showing  exactly  what  accounts  are  open  and  when  they 
must  be  followed  for  payment.  On  the  17th  of  July, 
for  instance,  the  line  of  red  clips  indicates  accounts  due 
on  that  date  and  not  yet  paid.  These  cards  are  taken 
out,  statements  are  sent  and  the  clips  moved  ahead  to  the 
next  date  when  action  must  be  taken.  Dead  cards — 
accounts  which  have  been  paid — may  be  removed  to  a 
separate  file. 

In  addition  to  the  routine  of  keeping  these  accounts, 
there  are  many  supplementary  devices  which  relieve 
your  mind  of  details  and  avoid  small  troubles.  One  of 
these  is  a  tickler  file,  which  serves  to  remind  you  of  the 
minor  duties  connected  with  your  personal  or  profes- 
sional affairs.  The  tickler  is  divided  by  twelve  tabbed 
cards  for  the  months  of  the  year  and  thirty-one  day 
cards,  which  may  be  advanced  monthly.  Reminder 
slips  filed  ahead  under  the  proper  date  in  this  tickler 
come  up  automatically  to  suggest  that  a  life  insurance 
premium  is  due,  fire  insurance  or  house  rent  must  be 
paid,  the  farm  lease  renewed,  or  any  one  of  a  hundred 
other  things  demands  a  moment  of  attention.  A  glance 
at  the  tickler  each  morning  or  once  in  two  or  three  days 
gets  little  things  done  on  time.  It  is  simply  another  way 
of  tying  a  string  around  your  finger. 

Another  aid  in  keeping  track  of  personal  and  pro- 
fessional affairs  is  a  vertical  file  kept  at  the  office,  on  the 
farm  or  in  the  home  for  receipts,  letters  and  other 
papers.  Letters  relating  to  personal  business  may  be  filed 
for  possible  reference  in  alphabetical  order.  For  re- 


150 BOOKKEEPING    SYSTEMS 

ceipts  and  similar  papers  yon  may  find  filing  by  sub- 
ject more  convenient.  Such  an  arrangement  simplifies 
work  that  has  to  be  done,  does  away  with  the  old  story 
of  lost  receipts  or  mislaid  correspondence,  and  proves 
itself  a  handy  supplement  to  your  accounting  system — a 
convenience  which  with  use  becomes  &  necessity. 


CCARCELY  too  much  emphasis  can  be  put  on  the  value  of 
^  a  thoroughly  modern  office  and  factory  system.  Re- 
peatedly I  have  been  impressed  with  the  extent  to  which  the 
manufacturer  is  inclined  to  depend  upon  progress  in  ma- 
chinery and  neglect  progress  in  office  and  factory  methods. 
If  his  business  is  in  any  way  yielding  unsatisfactory  results 
the  first  thing  the  manufacturer  seems  to  think  of  is  "Get  a 
new  machine  or  hire  a  new  man"  This  is  his  common 
panacea,  and  hundreds  of  manufacturing  enterprises  have 
failed  simply  because  improved  machinery  was  expected 
to  accomplish  what  could  only  be  done  by  means  of  good 
sound  business  system — that  established  routine  of  order 
working  along  the  lines  of  common  sense  and  sound  principle. 

— Alexander  H.  Revell 

President,  A.  H.  Revell  Company 


PART  IV-  HANDLING 

CORRESPONDENCE  AND 

OFFICE  WORK 

Science  in  Business 

MODERN  life  has  brought  forth  the  modern 
business    man — not    the   mere   trader  or 
merchant,   but   the   man  of  wide  interests,  and 
large  outlook,  and  broad  sympathies,  and   keen 
vision,  and  prophetic  feeling. 

The  modern  business  man  is  watching  for  a 
miracle.  He  is  harnessing  the  forces  of  nature, 
systematizing  the  forces  at  his  command,  com- 
bining the  powers  of  industry,  regulating  the 
tendencies  of  society. 

His  hope  is  really  the  hope  of  the  alchemist. 
The  alchemist  did  not  turn  lead  to  gold,  but  he 
founded  the  science  of  chemistry,  and  chemistry 
has  made  a  new  and  deep  revelation  of  the  won- 
ders of  creation. 

So  the  business  man  who  has  put  the  fruits  of 
the  scholar's  works  to  use  and  enormously  lifted 
the  body  of  civilization,  will  very  likely  never  see 
the  lead  of  modern  industrial  conditions  turned 
into  the  gold  of  an  ideal  human  condition;  but 
he  has  evolved  an  idea,  he  has  caught  a  glimpse 
of  a  great  truth,  he  has  opened  a  door  through 
which  the  truth  shall  come  forth. 


D.  P.  KINGSLEY 

President,  New  York  Life  Insurance  Company 


XVI 

CORRESPONDENCE  DETAILS 
AND  FILING  SYSTEMS 

By  William  E.  Wilson 
Consulting   Accountant 

EVERY  business  transaction  must  pass  through  your 
correspondence  department  at  some  time.  The 
chief  aim  in  organizing  and  conducting  this  department 
is  to  handle  correspondence  and  keep  records.  An  over- 
systematized  or  complicated  correspondence  department 
is  a  drag  on  all  other  departments. 

To  organize  your  correspondence  department  eco- 
nomically and  correctly,  place  it  in  charge  of  the  chief 
correspondent  under  the  office  or  business  manager. 
The  chief  correspondent  is  in  authority  over  six  sub-de- 
partment heads;  in  coming  jnfliL-  elerk ;  chie£__sienog- 
rapjier;  head_^ling__ctek ;  outgoing  mail  clerk;  tele- 
phone_.o_per-ator,  an^.infermation  clerk.  It  does  not  mat- 
ter what  the  size  of  the  concern  may  be,  all  these  classes 
of  work  must  be  maintained.  They  may  not  be  indi- 
vidual sub-departments — in  some  houses  one  person  may 
be  in  charge  of  several  of  the  branches — but  the  division 
of  work  always  holds  (Figure  XVI). 

Incoming  mail  is  handled  by  the  incoming  mail  clerk, 
who  sorts  and  divides  it  according  to  the  departments. 
All  letters  addressed  to  individuals  are  sent  direct  to 
the  addressee.  All  general  correspondence  is  opened  by 
the  chief  clerk  or  incoming  mail  clerk;  letters  of  great 
importance  go  to  the  higher  officials;  letters  requiring 


154  OFFICE    WORK 


individual  attention  are  sent  to  the  heads  of  the  different 
departments;  routine  letters  go  to  the  regular  corre- 
spondents. The  course  by  which  mail  is  distributed  from 
the  chief  clerk's  desk  is  shown  in  Figure  XVII. 

Although  all  letters  referring  to  the  activity  of  any 
department  go  direct  to  that  department 's  head,  he  may 
have  several  sub-departments  and  send  the  correspond- 
ence to  a  subordinate  to  be  answered. 

WRITING  the  letter  neatly,  promptly  and  correctly 
is   important   in    every   office — plans    by   which 
stenographic  work  is  checked  and  costs  determined. 

All  mail  of  importance  should  come  into  the  hands 
of  the  chief  clerk  for  examination,  before  it  is  referred 
to  the  proper  officials.  He  saves  the  heads  of  depart- 
ments much  labor  by  diverting  unimportant  matters 
and  turning  nonsensical  communications  into  the  waste 
basket.  It  is  often  a  good  plan  for  the  chief  clerk  to 
keep  a  record  of  all  important  mail  and  note  to  what  de- 
partments letters  are  sent;  in  this  way  he  keeps  his 
fingers  on  the  pulse  of  the  whole  correspondence  organi- 
zation, and  can  tell  exactly  what  kind  of  attention  was 
given,  each  letter.  In  some  concerns  when  the  mail  is 
sent  to  the  various  departments,  a  record  of  all  letters 
sent  to  that  department  accompanies  "the  letters.  At  the 
close  of  the  day  the  index  is  returned  with  the  attention 
each  communication  received  indicated  upon  the  index. 
If  any  communication  is  not  attended  to,  the  chief  clerk 
calls  up  to  learn  what  disposition  was  given  the  matter. 

The  head  stenographer  is  in  direct  charge  of  the 
stenographic  force  of  the  office.  While  certain  officials 
or  heads  of  departments  may  have  private  stenographers, 
a  force  of  general  stenographers,  subject  to  calls  from 
any  department  where  service  may  be  required  prevents 


HANDLING    CORRESPONDENCE 


155 


WORK  OF THE 
CORRESPONDENCE- 
DEPARTMENT 


CLASSIFYING 
JDISTRISUTINO 
(MAKING  RECORD*  OF  flircRBCO  CORRESPONOEMCC 


STENOGRAPHIC 
WORK 


KEEPING  WEEKLY   WORK  RECORB 
FURNISHING  STENOGRAPHIC  SW 
INSPECTING  WORM 
FOLLOWING  UP  WORK 

ALPHABETICAL 


NUMERICAL 
ST  SUBJECT 


COHMC*l>ONpCNCC  REQUISITIONS 
TRANSFERRINO 
rOLLOW.UR  FILE 
DOCUMENT  FILING 


NTCRHOUSC 


<    BASKET  STSTEM 
:OMMUNICATION  I 

INTCRHOUSE  NOTE* 


COLLECT!  N« 
ENCLOCINa 


OUTGOING  MAIL 


TELEPHONE  AND        KEERIN«  RECORM  OfOUTOOINA  CALLS 

CLEGRAFH  < 

SERVICE  I   KREPINa  RECORD*  OF  INCOMINa  CALL*. 


INFORMATION 


I  I 


OUNO   CALLER* 


ORGANIZING    MEMCNOEM 


FIGURE  XVI: 

department  is  outlined  in  this  chart,  which  shows 

incoming  and  outgoing  mail  and  other  communications 


The  function  of  each  division  of  the  correspondence 

the  proper  routine  for 


156  OFFICE    WORK 


the  time  wasting  and  idleness  which  is  generally  the 
accompaniment  of  the  individual  stenographer  system. 

All  stenographers  are  assembled  in  one  room.  When 
a  call  comes  for  a  stenographer  from  an  executive  or 
correspondent,  the  head  stenographer  makes  out  a  dupli- 
cate assignment  slip  (Form  I),  which  is  given  to  the 
stenographer  sent.  On  this  slip  the  stenographer  enters 
the  time  of  receiving  dictation,  of  transcribing  the  let- 
ters, and  the  number  of  letters.  When  the  assignment  is 
completed  the  slip  is  returned  to  the  head  stenographer, 
who  compares  it  with  the  copy  she  has  kept  and  files  it 
in  the  stenographer's  folder.  In  this  way  the  head 
stenographer  keeps  track  of  the  work  done  by  each  in- 
dividual. 

F*om  these  slips  the  amount  of  work  done  and  time 
put  in  is  transferred  to  the  individual  typist's  weekly 
card  (Form  II).  These  cards  may  be  made  the  basis  of 
a  system  of  computing  the  costs  of  stenographic  work, 
as  later  described. 

These  record  cards  can  be  amplified  to  keep  track  of 
postage  and  supplies,  such  as  paper,  envelopes,  follow-up 
sheets,  carbons,  books,  pencils,  and  so  on. 

It  is  well  also  to  have  the  chief  stenographer  see  that 
all  work  done  is  accurate  and  neat.  Men  judge  your 
business  by  what  they  see,  and  there  is  too  much  adver- 
tising value  in  a  neatly  written,  correctly  spelled  letter 
to  permit  careless  work.  The  work  of  every  untested 
stenographer  should  be  carefully  inspected  by  the  head 
stenographer  before  the  letter  is  returned  to  its  depart- 
ment to  be  signed. 

Promptness  in  work  is  also  a  matter  for  the  head 
stenographer.  By  referring  to  her  copies  of  the  as- 
signment slips  she  checks  work  so  that  letters  are  not 
left  over  in  the  note  books  from  one  day  to  another 


HANDLING    CORRESPONDENCE  157 

unless  they  are  reported  at  night  as  unwritten.  A 
standard  book  of  correspondence  rules  may  well  be  ar- 
ranged to  cover  all  these  points  of  letter  styles,  spelling, 


WEEKLY  MECOKO  Or  WON* 

WCCR 

0»T 

DICTATION                 »NO 
M**-|     LETTtR*        HRS 

NO. 

LCTTCHS 

H«. 

LCTTtHS 

H«..|t«T"T%. 

-1      J?i. 

HON. 

AimiGNMtMT  « 

LIP 

TUtS. 

TATION  FIIOM  HI 

MO  orLrrr 

wco. 

THU 

•AT. 

• 

FORM  I  (front  card):     The  stenographer's  assignment  slip  is  made  out 
in  duplicate  by  the  head  stenographer  for  all  work  done.     FORM  II  (back 
card):    Her  weekly  record  gives  a  classified  statement  of  all  kinds  of  work 
done  each  day 

paragraphing,  stationery  and  routine.  It  is  also  im- 
portant that  work  be  sent  to  its  proper  department  in 
time  for  correction  and  signing;  in  many  cases  where 
it  is  a  matter  of  great  importance,  it  must  pass  through 
the  correspondent's  hands,  then  on  to  the  chief  clerk  or 
a  head  executive  for  signing. 

IMPROPER  filing  is  sometimes  the  cause  of  aggravat- 
A  ing  delays  and  lost  business — right  methods  bring  to 
light  instantly  any  letter  which  is  wanted. 

.When  the  letters  have  been  typewritten  and  sent  back 
for  signature,  the  carbon  copies  go  to  the  filing  depart- 
ment. This  department,  upon  which  the  smooth  run- 
ning of  any  business  depends,  is  in  charge  of  a  head 


158  OFFICE    WORK 


filing  clerk  responsible  for  the  condition  of  the  files. 

The  principal  duty  of  the  head  filing  clerk  is  to  see 
that  all  files  are  properly  equipped,  and  that  each  sub- 
ordinate is  doing  the  work  promptly  and  correctly.  Fil- 
ing letters  in  the  wrong  place  soon  renders  the  filing  sys- 
tem inadequate  and  almost  useless. 

The  complete  correspondence  in  each  department, 
when  ready  for  filing,  is  gathered  by  a  messenger,  who 
brings  all  copies  to  the  sorter,  a  box  arrangement  (Fig- 
ure XVIII)  indexed  with  guides  similar  to  the  regular 
file.  This  distributing  device  saves  time  and  energy,  elim- 
inating the  necessity  of  going  from  file  to  file.  Corre- 
spondence should  pass  into  the  regular  file  as  quickly  as 
possible,  so  that  if  a  letter  is  wanted  the  next  day  after 
it  is  written,  it  can  be  found  under  its  proper  guide. 

The  simplest  system  is  that  which  files  solely  by  alpha- 
betical arrangement.  If  the  business  is  small,  this  plan 
will  be  found  sufficient.  Each  letter  of  the  alphabet  is 
divided  and  subdivided  as  far  as  desired.  The  "A" 
folders,  for  example,  may  be  indexed  "AB,"  "AD," 
"AG,"  and  so  on.  Under  "AB"  would  be  filed  cor- 
respondence, say,  of  Abbot  Brothers  Company,  together 
with  the  duplicate  copies  of  outgoing  letters  to  that  firm. 
Under  i  l  AD ' '  would  go  letters  to  and  from  John  Adams. 
A  transfer  cabinet,  similar  in  idea  but  containing  larger 
compartments,  is  used  periodically  to  relieve  the  current 
files. 

When  the  correspondence  of  a  firm  is  very  extensive, 
and  the  daily  volume  of  matter  to  be  filed  is  large  and 
comes  under  many  headingis,  a  combination  of  geo- 
graphical and  alphabetical  systems  will  be  found  most 
suitable.  The  file  is  subdivided  by  guides  printed  for 
states,  and  the  correspondence  of  each  state  is  arranged 
alphabetically.  There  are  fifty  states  and  territories  in 


HANDLING    CORRESPONDENCE 


159 


i 

• 


160  OFFICE    WORK 


the  United  States.  The  value  of  this  system,  therefore, 
is  evident.  A  dozen  filing  clerks  can  work  together  with- 
out mutual  hindrance.  When  you  wish  to  locate  corre- 
spondence, moreover,  ,the  system  has  at  once  eliminated 
forty-nine  out  of  the  fifty  possible  places  where  it  would 
be  necessary  to  search. 

In  the  numerical  filing  system,  each  correspondent  has 
his  individual  number,  which  always  identifies  him. 
This  requires  a  card  cross-index  arranged  alphabetically. 
"Where  business  requirements  call  for  reference  to  sub- 
jects treated  in  the  letter  rather  than  to  the  name  of  the 
correspondent,  numerical  filing  is  sometimes  satisfactory. 

Your  own  business  requirements  will  teach  you  what 
peculiar  adaptations  of  these  plans  to  make.  You  can 
have  miscellaneous  folders  for  infrequent  correspondence 
or  special  folders  in  varying  colors  to  signify  particular 
classes  of  letters.  The  color  scheme  can  also  be  extended 
to  include  metal  clips  or  guides  on  the  index  cards  or 
in  filing  drawers,  so  that  the  clerks  will  be  able  to  locate 
what  they  want  with  a  minimum  of  time. 

jThe  filing  should  be  so  divided  that  each  clerk  will 
have  certain  definite  files  in  his  charge  and  will  be 
responsible  for  their  condition.  This  centers  responsi- 
bility and  avoids  confusion  in  filing.  Such  a  rule  re- 
quires also  that  no  one  be  permitted  to  take  a  letter 
from  the  file  except  the  clerk  in  charge.  When  you  wish 
correspondence  from  the  files  a  correspondence  requi- 
sition (Form  III)  giving  the  name  of  the  correspondent, 
date  and  subject,  and  handed  to  the  head  filing  clerk 
gives  notice  to  the  clerk  in  charge.  This  requisition  is 
then  filed  in  the  place  from  which  the  letter  is  taken, 
and  returned  to  the  department  head  signing  it  only 
when  the  correspondence  requested  is  turned  back.  At 
intervals  papers  long  outstanding  should  be  called  in. 


HANDLING    CORRESPONDENCE  161 

All  correspondence  is  transferred  once  or  twice  a  year. 
In  the  alphabetical  files,  new  folders  may  be  provided 
on  the  first  of  January  of  each  year,  and  all  correspond- 
ence for  the  current  year  filed  in  the  new  folder.  The 
old  folders  are  to  remain  in  the  case  until  July  1.  On 
this  date  all  correspondence  of  the  previous  year  is  put 
in  transfer  cases  or  other  convenient  files.  This  plan 
leaves  at  least  six  months'  correspondence  in  the  files 
at  all  times  for  reference. 

The  numerical  transfer  is  effected  in  a  similar  man- 
lier; new  folders  are  to  be  provided  on  the  first  of 
January  for  the  correspondence  of  the  coming  year,  and 


FIGURE  XVIII:     The  "sorter"  is  a  convenient  box  in  which  correspond- 
ence is  placed  temporarily  and  classified.       It  has  divisions  corresponding 
to  those  in  the  general  files 

each  new  folder  is  inserted  directly  after  the  folder  of 
the  same  number,  in  which  the  correspondence  of  the 
previous  year  is  allowed  to  remain.  The  current  year 
is  at  the  same  time  stamped  on  the  index  card.  These 
folders  bearing  the  same  number  are  left  until  July  1, 
when  the  correspondence  of  the  last  year  is  removed. 

When   a  letter   is  written  which   may  require   fur- 
ther attention,  have  two  carbon  copies  made;  the  first 


162  OFFICE    WORK 


carbon  goes  to  the  permanent  file,  while  the  second,  made 
out  in  the  form  of  a  tickler  sheet  (Form  IV)  with  the 
follow-up  date  indicated,  is  filed  ahead  to  that  date  in 
the  tickler  file. 

All  the  follow-up  sheets  are  best  kept  together  in  one 
date  file  in  the  filing  department.  Each  day  the  clerk 
in  charge  takes  out  all  letters  filed  to  that  date,,  and  in- 
vestigates the  correspondence  concerning  each  to  see 
what  developments  have  taken  place.  If  a  sale  has  been 
made,  or  the  letter  has  accomplished  its  purpose,  nothing 
is  done  with  it.  But  if  it  has  remained  unanswered,  it 
is  sent  to  the  department  for  attention. 

Besides  this  method  of  follow-up,  a  holdover  file  is 
well  maintained  on  each  correspondent's  desk  to  take 
care  of  all  important  matters  on  which  the  correspondent 
may  be  working,  important  business  with  which  he 
wishes  to  keep  in  touch  or  which  is  not  ready  for  the 
completed  file. 

Contracts,  leases  and  all  valuable  papers  belong  in 
the  office  safe.  A  letter  file  in  the  safe  answers  very  well 
for  this  purpose  in  the  ordinary  business  house.  But 
where  the  concern  conducts  its  business  on  a  contract 
basis  or  by  special  agreements,  these  valuable  papers 
need  to  be  filed  alphabetically  in  a  special  safe  arranged 
for  that  purpose,  or  to  a  special  file  in  the  office  vault 
which  is  to  be  found  in  all  modern  office  buildings. 
Copies  of  orders,  where  they  run  into  large  amounts  of 
money,  are  filed  with  valuable  papers. 

Ordinary  papers,  invoices  and  statements  which  have 
been  given  attention  and  are  not  required  in  the  ac- 
counting department  are  to  be  filed  in  the  regular  cor- 
respondence files,  either  under  the  name  of  the  concern 
from  which  they  were  received,,  or  under  their  sub- 
jects. 


HANDLING     CORRESPONDENCE 


163 


The  most  complete  and  satisfactory  method  of  in- 
ter-house messenger  service  provides  that  a  messenger 
shall  visit  each  desk  every  half  hour  or  oftener  to  col- 
lect and  distribute  all  mail  and  papers,  and  gather  the 


CORRESPONDENCE  REQUISITION 


LETTERS  WANTED - 


DATE  OR  SUBJECT. 


LETTERS 
DELIVERED. 


DATE 
DELIVERED 


JAN. 

FEB. 

MAR. 

APR. 

MAY 

JUNE 

JULY 

AUG. 

SEPT. 

OCT. 

NOV. 

DEC. 


SUBJECT 
TO 


DATE 
FROM 


FORM  III  (back  card):  A  correspondence  requisition  mu.it  be  filled  ou  t 
by  any  person  needing  papers  from  the  file.  FORM  I V  (second  card) : 
Tickler  sheet.  FORM  V  (front  card):  Interhouse  correspondence  blank 


matter  for  filing.  Three  baskets  mounted  one  above  the 
other  appear  on  every  correspondent's  or  department 
head's  desk.  The  top  basket  is  used  for  incoming  com- 


164  OFFICE    WORK 


munications  of  all  kinds.  The  second  basket  contains 
documents  for  the  messenger  and  outgoing  correspond- 
ence, and  the  bottom  basket  is  for  matter  complete  for 
filing.  By  this  method  all  correspondence  is  kept  mov- 
ing in  the  proper  channels  without  delay. 

Interhouse  correspondence  by  telephone  is  not  always 
satisfactory  where  important  communications  take  place 
between  the  various  departments  of  a  house.  Where 
specific  directions  are  to  be  sent  to  any  department  in 
the  house,  have  the  communication  dictated  to  a  stenog- 
rapher, who  writes  it  on  a  note  blank,  filling  in  the  sub- 
ject and  the  names  of  the  persons  addressed  and  the 
writer,  as  provided  by  Form  V.  When  the  note  is  ready, 
it  is  signed  with  the  initials  of  the  writer  and  placed  in 
the  messenger  basket.  By  this  method  orders  are  not 
forgotten  and  mistakes  are  located. 

All  matter  of  business  importance  should  be  put  in 
writing.  The  written  order  puts  the  employee  and  de- 
partment manager  "on  record;"  a  detailed  account  of 
every  transaction  between  the  employees  of  the  house  may 
be  had  by  consulting  the  files.  A  system  of  this  nature 
prevents  the  slips  or  inaccuracies  of  memory,  a  loss  of 
trade  and  money  as  well  as  the  disorganization  of  the 
office. 

The  outgoing  mail  clerk  looks  after  the  gathering,  en- 
closing, stamping  and  mailing  of  correspondence.  When 
the  correspondence  has  been  collected  from  all  depart- 
ments, it  is  sorted  in  the  mailing  room,  and  when  there 
are  several  letters  to  an  individual,  branch  house,  agency 
or  firm,  they  are  all  enclosed  in  one  envelope,  thereby 
saving  postage. 

Where  the  various  departments  stamp  the  envelopes 
a  record  is  kept  by  the  cashier  of  the  amount  of  postage 
given  out.  As  this  mail  comes  from  the  different  depart- 


HANDLING    CORRESPONDENCE 


165 


ments  the  outgoing  mail  clerk  checks  up  and  charges 
each  department  with  the  amount  of  postage  used.  Daily 
checking  prevents  a  possible  leak  in  the  postage  account. 
A  balance  is  struck  at  the  end  of  every  month. 

The  outgoing  mail  clerk  needs  to  be  familiar  with  the 
schedules  of  all  mail  trains.  In  cases  where  the  out- 
going mail  reaches  large  volume  dispatch  results  from 
keeping  the  letters  assorted  according  to  the  geographi- 


OUTGOING  PAID  MESSAGES 
WEEK  ENDING 


DATE 


FROM 


TO 


CHARGE 


INCOMING  COLLECT  MESSAGES 
WEEK  ENDING  


DATE 


TO 


FROM 


CHARGE 


FORM  VI  (back  card):    Card  on  which  telephone  girl  keeps  all  outgoing 

paid  messages.    FORM  VII  (front  card):    Incoming  collect  messages 

are   recorded  on   this   card 

cal  mailing  lists  and  further  according  to  trains.  Post- 
office  authorities  are  always  willing  to  furnish  informa- 
tion along  these  lines. 

The  telephone  operator  has  charge  of  the  telephone 
exchange  and  looks  after  all  telegrams  and  telephone 


166  OFFICE    WORK 


messages.  She  keeps  a  record  of  all  long-distance  calls 
and  especially  of  the  calls  coming  from  the  various  de- 
partments of  the  house;  and  also  of  all  outgoing  paid 
messages  (Form  VI)  and  incoming  collect  messages 
(Form  VII). 

Arrange  also  for  an  information  clerk  who  will  keep 
posted  on  the  working  of  the  whole  office  and  the  per- 
sonnel of  the  firm.  It  is  his  duty  to  meet  visitors  tact- 
fully; to  learn  what  they  want  and  refer  them  to  the 
proper  individual.  In  many  instances  the  offices  of 
telephone  operator  and  information  clerk  are  combined. 
All  outgoing  messenger  boys  are  in  charge  of  the  in- 
formation clerk. 

Only  by  careful  choice  of  employees  for  these  six  essen- 
tials of  office  routine  can  you  put  at  the  disposal  of  your 
executives  the  most  efficient  working  machinery.  Your 
success  depends  upon  simple  rules,  understood  and  firm- 
ly enforced. 


RECORDS  kept  in  a  haphazard  way,  or  not  kept  at  all, 
don't  mean  "less  office  expense";    they  mean  chances 
missed,  sales  lost,  efforts  wasted. 

— G.  R.  Clayton 


XVII 
GETTING  OUT  THE  MAIL 

By  Edward  Mott  Woolley 

EXCEPT  where  tasks  have  been  set  or  piece  rates 
fixed  for  certain  repeat  operations,  such  as  enter- 
ing orders,  typing  addresses,  and  folding  and  in- 
serting circular  letters,  the  day's  work  in  the  office  has 
varied  as  widely  as  the  individual  worker  and  the  fac- 
tors influencing  him.  Expert  employees  of  every  class, 
by  reason  of  their  competence,  have  had  to  shoulder 
double  burdens.  Higher  wages  have  recompensed  them ; 
the  less  skillful  have  ''had  an  easy  time."  The  busi- 
ness has  been  the  chief  sufferer — paying  premiums  for 
work  which,  with  proper  organization,  the  slower  clerks 
could  have  accomplished;  enduring  delays  that  affected 
customers  and  other  vital  interests  while  the  overloaded 
experts  were  "catching  up"  or  recuperating  from  over- 
time; carrying  superfluous  half -workers  because  there 
was  no  clear  understanding  of  how  much  was  to  be 
done,  how  much  one  clerk  or  stenographer  could  do 
and,  therefore,  how  many  employees  were  needed.  Yet 
these  points  are  subject  to  the  accurate  appraisal  that 
comes  of  time-study  and  expert  planning. 

The  one  office  activity  which  touches  every  business, 
great  or  small,  is  the  handling  of  correspondence — the 
everyday  task  of  getting  out  the  mail  on  time  and  in 
the  best  possible  shape. 


168  OFFICE    WORK 


Firms  without  number  boast  of  their  policy  of  an- 
swering letters  on  the  day  of  their  receipt.  Investigate 
these  and  you  will  find  that  their  correspondence  is 
nearly  always  routine  and  does  not  need  sales  effort 
or  personal  attention.  For  the  great  majority  of 
houses,  however,  there  are  dozens  or  even  hundreds  of 
letters  daily  which  ordinary  form-fed  correspondents 
cannot  dictate,  but  which  require  the  attention  of  execu- 
tives saddled  with  many  other  functions. 

T3  E-ORGANIZATION  of  an  office  showed  startling 
•TV  wastes  in  the  conduct  of  the  stenographic  force — 
what  time-studies  and  revised  schedules  accomplished. 

A  large  eastern  company  determined  to  re-organize  its 
office  along  efficiency  lines.  The  complaints  of  employees, 
the  obvious  effect  which  delays  were  having  on  customers 
and  allied  outside  interests,  the  occasional  breakdown  of 
over-driven  stenographers  and  the  increasing  volume  of 
correspondence  forced  the  decision  to  employ  an  "effici- 
ency engineer."  Though  not  the  first  activity  on  which 
he  turned  his  microscope,  the  handling  of  the  company's 
correspondence  was  the  function  which  showed  the  most 
serious  time-wastes  and  money  losses. 

The  conditions  he  found,  it  is  safe  to  say,  exist  to  some 
extent  in  every  business  large  enough  to  be  department- 
ized.  Only  a  few  minor  executives  had  a  fixed  hour  for 
dictation;  the  others  consulted  their  own  convenience 
exclusively,  even  to  the  length  of  postponing  dictation 
until  late  in  the  afternoon  and  continuing  it  long  past 
the  five-thirty  closing  hour.  Frequently  a  stenographer 
quitting  at  six-thirty,  after  two  or  three  hours  "taking" 
would  have  notes  for  twenty-five  or  thirty  letters  in  her 
book  which  could  not  be  transcribed  until  the  morrow. 
Sometimes  after  an  absence  from  the  city  an  executive 


GETTING    OUT    THE    MAIL 169 

would  have  as  many  as  fifty  letters  to  dictate  in  a  single 
day.  If  after  one  of  these  ordeals,  a  stenographer  failed 
to  report  next  morning,  the  congestion  became  more 
acute  and  the  effect  on  waiting  customers  more  exasper- 
ating. 

Hiring  extra  girls  to  provide  for  these  emergencies 
helped  but  little.  Advanced  wages  did  not  insure  the 
experts  against  occasional  collapse.  The  situation  called 
for  an  increase  in  efficiency  for  the  less  skillful,  and  a 
plan  of  distributing  work  so  as  to  allow  the  finishing 
and  dispatch  of  each  day's  letters  before  closing  time. 

Analysis  and  time-study  of  every  operation  bearing 
on  the  handling  of  corespondence  was  the  main  under- 
taking. To  discover  or  develop  the  best  method  of 
writing  a  letter,  to  determine  the  minimum  time  which 
should  be  allowed  for  it  and  the  rest  period  necessary 
to  avoid  strain  and  fatigue,  you  must  have  exact  knowl- 
edge of  a  dozen  unit  operations  contributing  to  it.  The 
best  way  of  inserting  the  letter-sheet,  for  instance,  the 
time  it  takes,  the  unnecessary  motions  indulged  in  by 
most  typists,  were  simple  detail  problems ;  but  it  required 
repeated  stop-watch  studies  of  a  dozen  of  the  deftest 
stenographers  before  a  standard  for  the  use  of  all  was 
established. 

One  after  the  other,  the  unit  operations  were  timed 
and  the  straight-line  method  of  performing  each  wrought 
out.  The  swiftest,  easiest  way  of  locating  the  date  line, 
for  example,  the  shortest  way  of  finding  the  first  address 
line,  the  matter  of  margins,  the  line-lengths,  the  spacing, 
were  all  subjects  of  careful  investigation  and  experiment 
before  the  standard  for  each  was  determined.  To  expe- 
dite the  typing,  the  style  of  the  company's  letters  was 
changed.  The  indenting  of  paragraphs  was  discontinued 
(an  extra  line  space  serving  to  mark  the  transition)  to 


170  OFFICE    WORK 


spare  the  operator  the  troublesome  shifting  of  the  car- 
riage. 

For  time-study  purposes,  letters  were  resolved  into 
their  unit  elements — date,  address,  salutation,  message 
and  superscription,  and  the  minimum  time  allowed  for 
writing  each  unit  fixed.  When  the  investigation  and 
standardization  were  finished,  the  company  not  only  had 
evolved  the  easiest  form  of  letter  to  write,  but  it  knew 
also  just  how  many  minutes  and  seconds  a  competent 
stenographer  should  take  to  turn  out  a  seven-  or  ten- 
line  letter  or  one  covering  two  pages.  Knowing  also  the 
daily  maximum  number  of  letters  written  it  was  easy 
to  figure  how  many  girls  were  needed  to  get  them  out. 

REGULAR  dictation  hours  massed  in  the  early  part 
of  the  day,  and  the  relay  handling  of  stenographers 
resulted  in  dividing  the  work  more  equitably. 

The  investigator  began  by  establishing  hours  for  dic- 
tation. Before,  there  had  been  no  pretense  of  observing 
either.  Executives  summoned  and  dismissed  stenogra- 
phers whenever  it  suited  them,  devoting  half  of  one 
morning  to  dictation  and  shifting,  next  day,  to  late  af- 
ternoon. The  basic  theory  was  sound,  of  course,  that  the 
time  of  a  boss  is  of  greater  value  than  that  of  a  clerk. 
As  in  many  other  offices,  however,,  the  theory  had  run 
to  seed  and  the  whim  of  the  head  ruled  frequently  in- 
stead of  the  necessities  of  the  department. 

In  framing  his  preliminary  schedule  of  dictation 
hours,  the  investigator  deferred,  as  much  as  possible,  to 
the  wishes  and  habits  of  executives.  Several  had  pri- 
vate secretaries  and  made  requisitions  on  the  general 
stenographic  force  only  when  the  secretaries  were  loaded 
up.  Others  dictated  virtually  all  their  outside  letter  and 
house  notes  and  reports  to  general  stenographers.  The 


GETTING    OUT    THE    MAIL 171 

chief  trouble  had  been  that,  after  calling  in  a  shorthand 
writer  the  dictation  was  continued  until  the  grist  of  let- 
ters or  reports  was  done — a  process  lasting  at  times 
three  or  four  hours  and  leaving  the  girl  too  exhausted 
to  transcribe  her  notes  even  when  time  remained  before 
closing. 

With  a  table  of  executives '  preferences  in  the  mat- 
ter of  hours  and  stenographers  before  him,  the  efficien- 
cy engineer  arranged  a  dictation  schedule  which  the 
various  heads  accepted,  though  not  a  few  grumbled  later 
when  they  found  they  were  expected  to  observe  it.  The 
bulk  of  the  correspondence  work  was  concentrated  in 
the  forenoon  while  the  afternoon  dictation,  except  for 
urgent  letters  or  telegrams,  had  to  be  finished  by  four 
o'clock,  routine  matters  going  over  till  next  morning. 
This  left  ninety  minutes  to  the  stenographer  to  clear  up 
her  final  "  takes "  and  get  the  letters  into  the  last  out- 
going mail. 

To  guard  against  the  overloading  of  individuals,  a 
head  stenographer  was  placed  in  charge.  Her  duty 
was  to  supply  stenographers  according  to  the  schedule, 
consulting  each  head's  preference  as  far  as  possible,  and 
supplying  reliefs  whenever  any  single  dictation  went  be- 
yond the  established  bounds.  At  or  around  four  o'clock, 
for  example,  these  limits  meant  as  many  pages  of  notes 
as  could  be  transcribed  in  the  eighty  or  ninety  minutes 
remaining  of  the  day.  Exceptions  were  made,  of  course, 
where  reports  were  in  preparation  and  a  break  would  be 
inadvisable. 

On  straight  correspondence,  eight  or  ten  pages  of  notes 
would  be  the  average  ''take"  if  a  relief  was  available. 
When  a  stenographer  was  held  beyond  four  o'clock,  she 
reported  the  circumstance.  If  the  delay  kept  her  from 
transcribing  all  her  notes  before  five-thirty  she  filled 


172  OFFICE    WORK 


out  a  blank  stating  how  many  letters  were  left  over. 

This  relay  plan  of  handling  stenographers  was  adopt- 
ed as  a  permanent  system,  despite  the  objections  of 
executives  who  missed  the  free-and-easy  method  formerly 
in  vogue.  In  many  offices  the  relay  system  might  prove 
awkward  or  entirely  unsuitable.  It  contains,  however, 
the  germ  of  an  idea  which  might  be  adapted  either  to  a 
small  office  where  two  stenographers  are  employed  to 
do  what  one  might  readily  accomplish,,  or  to  the  large 
organization  where  the  general  stenographers  are  compe- 
tent to  handle  the  correspondence  of  nearly  all  depart- 
ments. 

STUDY    of  machines  and  the  work  of  individuals 
revealed   wastes   and   led   to   a  standard  "one  best 
way"  for  every   operation. 

With  his  temporary  dictation  schedule  in  force,  the 
investigator  turned  to  analysis  and  time-study  of  the 
things  which  affected  speed  and  accuracy  in  individuals. 
How  many  times  a  typewriter  key  should  be  struck  in  a 
minute  was  a  basic  problem;  before  it  was  solved  and  a 
standard  determined,  not  only  had  a  dozen  operators 
been  studied  with  a  stop-watch,  and  their  personal  meth- 
ods and  motions  noted;  but  the  inquiry  had  also  taken 
into  consideration  the  action  of  different  makes  of  ma- 
chines, their  condition,  adjustment  and  repair  as  affect- 
ing output,  the  placing  and  lighting  of  desks,  their 
height  and  design,  and  the  height  and  character  of  the 
chair.  These  physical  factors  were  standardized  before 
the  ultimate  standard  for  the  number  of  strokes  per 
minute  was  decided  upon.  The  aim  was  to  find  the 
easiest  way,  to  eliminate  interruptions  and  hindrances, 
but  at  the  same  time  to  avoid  undue  physical  and  nerv- 
ous strain  and  allow  rest  periods. 


GETTING    OUT    THE    MAIL 173 

With  a  stenographer  of  average  capacity,  speed  in 
shorthand  work  is  governed  by  the  speed  of  dictation. 
The  transcription  of  notes  is  a  process  which  can  be 
standardized,  however.  In  this  case  it  was  learned  that 
an  operator,  working  at  the  efficiency  required,  would 
need  half  an  hour,  or  an  hour  to  write  a  certain  num- 
ber of  notebook  pages.  Thus,  if  she  began  at  four 
o'clock  with  a  given  number  of  pages  to  transcribe,  and 
was  protected  from  interruptions,  it  was  certain  that  her 
letters  would  go  to  the  sealing  clerk  at  a  certain  desired 
hour.  If  she  failed,  the  cause  clearly  was  low  efficiency. 

To  supply  the  necessary  incentive,  a  bonus  of  ten  per 
cent  of  her  salary  was  paid  to  every  girl  who  completed 
her  day's  work  before  five-twenty  and  had  her  letters 
in  the  mailing  department.  This  did  not  mean  that 
she  had  worked  all  day  at  the  maximum  normal  speed. 
A  stenographer's  work  cannot  be  gauged  as  precisely 
as  that  of  a  machinist,  who  repeats  over  and  over  a  series 
of  motions  until  it  is  finished  and  then  begins  immediate- 
ly upon  another  series.  In  fact,  it  was  not  the  purpose  to 
crowd  stenographers  all  day,  but  in  the  afternoon  the 
work  was  almost  continuous,  and  the  bonus  was  meant 
to  encourage  efficiency  during  this  crowded  period.  Fin- 
ishing her  day's  work  within  the  prescribed  time,  a 
stenographer  filled  out  a  blank,  "I  completed  my  let- 
ters today  at  5:20  p.  m./'  and  handed  it  to  the  chief 
stenographer.  If  she  failed  to  finish  the  work,  the  slip 
read:  "I  was  unable  to  finish  my  letters  until  6:20 
p.  m.  The  reason  was  that  Mr.  Lawrence  did  not  finish 
dictation  until  5:10  p.  m." 

If  the  reason  was  due  to  some  hindrance  not  her  own 
fault,  she  was  allowed  the  bonus.  The  bonus  consider- 
ably reduced  absences.  Stenographers  were  paid  for 
moderate  periods  of  absence,  but  the  bonus  was  lost. 


174  OFFICE    WORK 


The  stricter  the  adherence  to  the  dictation  schedule, 
the  more  frequent  was  the  successful  accomplishment  of 
the  tasks.  The  greatest  single  trouble  experienced  was 
the  difficulty  in  inducing  executives  to  cooperate  in 
this  direction.  The  habit  was  gradually  formed,  how- 
ever, and  the  results  in  reduced  office  expense  were  so 
marked  that  a  violation  of  the  rule  without  good  cause 
was  inexcusable  waste.  Executives  soon  came  voluntar- 
ily to  prefer  the  new  method.  Eventually,  it  was  found 
that  stenographers  working  at  the  prescribed  normal 
efficiency,  could  accomplish  nearly  fifty  per  cent  more 
than  the  former  average  output. 

The  increase  in  efficiency  was  due  largely  to  improve- 
ment in  conditions  surrounding  the  work,  rather  than 
to  increased  speed  of  operation.  Interruptions  were 
guarded  against  and  matter  to  be  dictated  was  collated 
in  advance. 

Letters  and  other  papers  were  arranged  in  compact 
form,  and  checked  off  as  the  dictation  proceeded.  If  for 
any  reason  a  letter  was  not  answered  at  its  scheduled 
time,  it  was  put  in  a  " delayed  correspondence"  basket. 
If  necessary  to  send  it  to  some  other  executive,  a  mem- 
orandum blank  was  required  to  be  substituted.  Every 
day  this  basket  of  delayed  correspondence  was  gone 
through.  Rubber  bands  over  the  baskets  prevented  mat- 
ter from  being  lost. 

Though  thirty  or  more  stenographers  were  employed, 
no  attempt  had  been  made  to  group  them  according  to 
their  work.  Correspondence  girls  were  intermingled 
with  others  who  did  card  or  advertising  work. 

Furthermore,  the  less  capable  stenographers  were 
called  on  at  times  to  do  letter  work,  and  frequently  the 
inferior  classes  of  stenographic  duty  fell  to  better  work- 
ers. This  policy  was  changed  so  that  the  most  skillful 


GETTING    OUT    THE    MAIL 175 

operators  were  kept  on  the  highest  class  of  duty.  The 
correspondence  stenographers  were  grouped  by  them- 
selves. 

The  early  time-studies  showed  large  time-wastes  due 
to  conversation.  Another  large  loss  came  from  unneces- 
sary steps.  Girls  were  constantly  traversing  the  entire 
office,  some  of  them  having  to  make  long  detours  around 
articles  of  furniture,,  railings,  and  other  obstructions. 
Gates  hindered  their  progress  at  several  points.  Two 
of  the  girls,  taking  dictation  from  the  higher  officials, 
made  as  many  as  forty  or  fifty  trips  of  this  sort  a  day. 

STANDARDIZATION  extended  to  apparent  trifles, 
^  such  as  the  proper  way  to  insert  paper  in  the  type- 
writer,  and  resulted  in  the  long  run  in  big  savings. 

To  remedy  conditions  by  minimizing  conversation, and 
eliminating  unnecessary  travel,,  the  correspondence 
stenographers  were  brought  to  a  central  location  and 
grouped  along  both  sides  of  the  center  aisles.  The  sub- 
groups were  arranged  so  as  to  separate  operators  by  five- 
foot  screens,  reducing  noise  and  interruptions  and  mak- 
ing conversation  impossible  without  leaving  the  desk. 
The  offices  of  several  executives  were  also  centralized.  A 
buzzer  call-system  connecting  these  with  the  head  stenog- 
rapher's  desk  was  installed. 

The  old  plan  of  lighting — a  hit-or-miss  scheme  of  over- 
head swinging  lamps,  with  some  desk  lights — was  abol- 
ished. The  new  system  used  lights  attached  to  movable 
arms  allowing  direct  illumination  to  the  machine  or  the 
desk,  as  desired.  Indirectly,  the  new  system  reduced  eye 
troubles  and  nervous  strain. 

Typewriters  also  were  standardized.  Half  a  dozen 
makes  had  been  in  use,  some  admittedly  inferior.  The 
make  proved  the  best  by  test  was  adopted  for  general 


176  OFFICE    WORK 


•use.  A  capable  man  was  put  in  charge  of  the  mechani- 
cal care  of  the  machines  and  stenographers  were  relieved 
from  the  daily  task  of  cleaning,  oiling,  changing  ribbons 
and  so  on.  These  latter  operations  were  performed  by 
boys  who  arrived  at  eight  o'clock  in  the  morning. 

The  adoption  of  a  standard  chair  effected  a  consider- 
able time-saving.  One  stenographer  had  long  used  a 
swivel  chair  with  a  worn  screw.  The  seat  slipped  down 
continually  and  had  to  be  screwed  up  perhaps  forty 
times  a  day. 

In  this  office  a  large  number  of  technical  terms  were 
used,  and  new  stenographers  ordinarily  required  a  long 
time  to  familiarize  themselves  with  these  words.  Half 
a  dozen  trips  to  the  dictionary  were  not  unusual  in 
writing  a  single  letter,  and  executives  lost  time  during 
dictation  by  the  necessity  for  explaining  terms  and 
spelling  out  words.  This  trouble  was  minimized  by  the 
use  of  a  sheet  containing  in  alphabetical  order  all  the 
technical  words  in  common  use.  One  of  the  first  duties 
of  a  new  stenographer  was  to  learn  how  to  spell  and 
pronounce  these  technical  terms.  "When  an  executive 
dictated  to  a  stenographer  unfamiliar  with  these  terms 
he  did  not  have  to  waste  his  time  to  stop  and  spell  out 
words,  at  the  same  time  interrupting  the  train  of  his 
thoughts;  he  simply  referred  her  to  this  sheet. 


HPRAIN  yourself  to  like  your  business,  to  concentrate  your- 

A  self  upon  it,  and  success  mil  follow  as  naturally  as  crops 

follow  seeding. 


—Edward  P.  Hatch 

President.  Lord  &  Taylor 


XVIII 

CORRECT  ROUTINE  FOR  THE 
SALES  ORDER 

By  William  E.  Wilson 
Consulting  Accountant 

HANDLING  a  sales  order  after  it  has  come  into  the 
house  from  the  sales  department  and  aside  from 
the  financial  routine  of  sales  accounting,  is  simply  a  mat- 
ter of  office  routine. 

With  the  opening  of  the  mail,  all  orders  received  from 
salesmen  or  direct  from  customers  are  placed  together 
and  the  first  process  is  to  enter  them  on  a  sales  register. 
This  register  is  purely  to  protect  against  the  loss  of  the 
original  and  in  order  to  have  a  basis  for  checking  back. 
This  registration  includes  merely  the  entry  of  the  name 
of  the  customer,  the  amount  of  the  order,  and  the  date 
of  its  receipt.  The  orders  are  entered  on  the  register 
sheet  consecutively,  one  on  each  line.  Every  line  is 
numbered  in  series  and  the  same  number  is  placed  on 
the  order. 

From  here  they  go  direct  to  the  order  department, 
where  they  first  pass  under  the  eye  of  either  the  man- 
ager of  the  department  or  his  assistants  for  "interpre- 
tation." The  entry  clerks  who  will  next  receive  the 
orders  are  supposed  to  do  only  the  mechanical  work  of 
entering.  First,  however,  you  need  some  responsible 
person  to  interpret  the  order,  and  by  a  system  of  under- 
lining or  key  figures,  to  show  what  it  means,  so  that 
the  entry  clerk  need  not  read  the  entire  letter. 


178  OFFICE    WORK 


Mechanical  development  in  entry  work  calls  for  the 
making  out  of  all  records  pertaining  to  the  order  at 
writing. 

Six  classes  of  copies  are  required  in  the  usual  routine 
of  business:  first,  the  office  copy  of  an  order,  which 
forms  the  permanent  record  (Form I) ;  second,  the  copy 
which  is  to  go  to  the  factory,  warehouse  or  shipping 
room  (Form  II)  as  instruction  for  gathering  the  arti- 
cles; third,  the  acknowledgment  of  the  order,  to  be  sent 
to  the  customer  (Form  III)  ;  fourth,  the  label  to  be  sent 
to  the  shipping  room  to  be  pasted  on  the  package  as 
shipping  direction  (Form  IV)  ;  fifth,  a  copy  for  the 
files  of  the  sales  department  (Form  V)  ;  sixth,  the  in- 
voice (Form  VI). 

According  to  the  routine  of  the  business,  other  copies 
may  be  added.  Those  named  are  simply  the  basic  copies 
required  in  every  business.  In  some  offices,  a  copy  is 
made  for  the  advertising  department ;  two  or  even  three 
copies  are  often  made  for  the  shipping  room  to  be  signed 
as  receipts  by  the  transportation  companies;  charge 
sheets  to  be  sent  to  the  accounting  department,  from 
which  it  makes  its  entries  (Form  VII) ;  an  additional 
copy  of  the  invoice  to  be  used  as  the  ledger  record  in  the 
accounting  department. 

The  two  sets  of  invoices  and  charge  sheets  are  placed 
in  a  suspense  order  file  where  they  remain  until  the  goods 
have  been  shipped  to  the  customer.  The  original  office 
copy  is  sent  to  the  correct  department  for  approval. 
"When  it  is  returned  approved,  the  various  department 
sheets  are  forwarded  to  the  respective  departments.  By 
this  plan  all  departments  may  be  employed  simultan- 
eously in  filling  the  order. 

Copies  may  also  be  made  for  the  collection  follow- 
up  system.  One  may  be  a  statement,  another  a  notice 


SALES    RECORDS 


179 


to  the  customer  of  a  sight  draft  about  to  be  made, 
and  a  third,  a  sight  draft.  These  three  forms  are  then 
fastened  together  and  filed  chronologically  in  the  tickler. 
On  the  day  they  turn  up  in  the  date  file,  a  statement  is 
mailed  to  the  customer.  The  draft  and  the  notice  are 
refiled  to  the  next  date,  and  so  on  till  sent. 

The  acknowledgment  copy  is  immediately  sent  to  the 
customer;  a  copy  is  sent  to  the  plant,  warehouse  or 
storeroom  or  one  copy  to  each  department  if  the  order 


SALES  ORDER 


ORDERS  DELIVERED  BY  RECEIVING  TO  ENTRY  DEPARTMENT 
ENTRY  ON  ORDER  REGISTER 

I      EXAMINED  AND  CHECKED  8V  INTERPRETER 

ACKNOWLEDGMENT  SENT 
ENTRY  OF  ORDER       <( 

I      MANIFOLC 


I 


DISTRIBUTION 
OF  COPIES 


FOLLOW-UP 
ON  ORDERS 


LD  COPIES  MADE  OUT 
CHECKED  WITH  ORDER  REGISTER 

(1)    COPT  FOR  PERMANENT  OFFICE  RECORD 

<2>    COPY  TO  STOCK  ROOM  OR 

13     COPV  FOR  ACKNOWLEDGMENT 

14)    COPY  TO  SHIPPING   ROOM 

16)    COPV  TO  SALES  DEPARTMENT 

<6>   COPY  FOR  INVOICE 

TICKLER  FILE 
BACK  ORDERING 
SUSPENSE  FILE 


FIGURE  XIX:     Sales  orders  follow  a  definite  routine  as  soon  as  they 
reach  the  house.     This  chart  shows  the  method  by  which  each  order  is  pro- 
cessed to  insure  proper  shipment 

calls  for  goods  from  different  departments  and  from  this 
the  goods  are  gathered,  checked  by  the  order  and  sent 
from  the  plant,  the  warehouse  or  the  different  depart- 


180 


OFFICE     WORK 


ments  to  the  shipping  room,  accompanied  by  the  orders. 
In  the  meantime  a  copy  of  the  complete  order  is  sent 
to  the  shipping  department,  by  which  the  goods  will 
finally  be  checked  and  made  ready  for  shipment. 


OFFICE  COPY 


THEIR  NO.. 
OUR  NO,__ 


CUSTOMER. 

ADDRESS 


RCGISTCA  NO.. 
CREDIT 


DESCRIPTION 


PRICE         EXTENSION 


DEPARTMENT  ORDER 

STOCK  ROOM  COPV 


COT  OUT  av 

CHECKCDBV 


PRICE  MEMO 


4=4 


ACKNOWLEDGMENT  OF  ORDER 


TOUR  NO.. 
OUR  NO.  _ 


REGISTER  NO. 


WE  ACKNOWLEDGE  RECEIPT  OF  YOUR  ORDER  FOR 


DESCRIPTION 


SHIPPING  INSTRUCTIONS 


•T* 

VIA. 


FORM  I  (top  card}:    The  first  copy  of  an  order  is  held  as  the  office  record. 

FORM  II  (second  card}:    Departmental  copy.     FORM  III  (third  card): 

Acknowledgment  of  order.     FORM  IV  (bottom  card}:    Shipping  label 

The  copy  which  serves  as  the  label  is  placed  on  the 
package  and  it  is  then  sent  out  to  the  customer.  If  the 
copies  include  shipping  receipts,  these  have  gone  to  the 


SALES    RECORDS 


181 


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182 


OFFICE    WORK 


shipping  room  with  the  first  copy  and  label,  so  that  the 
proper  receipts  are  taken  from  the  transportation  com- 
pany. All  the  copies  are  then  sent  back  to  the  office. 
One  copy  is  now  sent  to  the  sales  department  to  go  into 


< 
1 

SALES  DEPARTM  ENT  COPY 

OHOIB  MO.    .  .._,  . 

GOT  OUT  BT 

CHECKED  BY 

°XXX  [  aoUo7oTuV  |                                    *"T'CL"                                         1  V'«  ||  "«• 

INVOICE 

LOATE  or  IN  void                    i«      j  -    o  AT  t  or  ORDER  •• 
OTO                                                                                                                              YOU*  NO 

n 

L 

r» 

omN                                      .           j                                             aun  NO 

TATC     ,,    .                                                                                                                                    INWOICC  NO 

1*                                                                       ,...„                                          Tr«M«    ._    ,,_    ., 

CAR  NO 

ORDERED) 

DESCRIPTION 

PNICK          EXTENSION 

TOTAL 

CUSTOMER 

CHARGE  RECORD 

RlrtRINCt 

LCOOCN 

CREDIT*                      BALANCE 

• 

BOOMS* 

,,.  „     *                   ,      » 

•                                      • 

QUANTITY 
ORDERED 

QUANTITY 

SHIPPED 

DCSCRIPTION 

PRICE        EXTENSION 

TOTAL 

FORM  V  (top  card):    Copy  filed  by  the  sales  department.    FORM  VI 

(second  card):     The  invoice  sent  to  the  purchaser.    FORM  VII  (bottom 

card):     Copy  sent  to  accounting  department  as  a  charge  record 

its  records,  one  copy  is  kept  in  the  office*  and  filed  with 
the  permanent  correspondence  on  the  sale. 

One  copy  has  also  been  held  in  the  order  department 


SALES    RECORDS 183 

awaiting  the  shipping  report.  Against  this  the  shipping 
copy  or  report  is  now  checked  to  be  sure  that  all  goods 
have  been  shipped.  After  all  the  goods  have  been  shipped, 
the  copy  which  serves  as  the  bill  and  which  has  been  held 
in  the  order  department  is  sent  with  the  office  copy 
into  the  accounting  department. 

A  further  duty  of  the  order  department  is  to  follow 
up  orders  to  see  that  they  are  shipped  on  time,  and 
correctly.  In  a  business  where  prompt  shipment  is  es- 
sential, a  date  is  usually  specified  on  the  order.  In  that 
case,  the  copy  which  is  held  in  the  order  department  is 
put  into  a  tickler  file  under  the  date  on  which  ship- 
ment is  to  take  place  or  when  the  shipping  copy  is  sup- 
posed to  come  back  with  the  information  that  the  goods 
ordered  have  been  sent  out..  Every  morning  these  copies 
are  taken  out  for  follow-up. 

When  shipment  is  made,  three  copies  of  the  shipping 
receipt  or  bill  of  lading  are  drawn  up  by  the  shipper 
and  the  agent  of  the  railroad  company.  The  original 
receipt  (Form  VIII)  is  retained  as  a  sales  record.  The 
bill  of  lading  is  described  at  further  length  in  the  next 
chapter. 


HPHERE  is  probably  no  other  single  word  in  the  language 

that  better  describes  success  than  "system"     The  larger 

the  business,  the  better  must  be  the  system  by  which  it  is 

conducted;  yet  whatever  its  size,  system  is  the  essential  factor. 

— Leon  Mandel 

Mandel  Brothers 


XIX 

KEEPING  RECORD  OF  GOODS 
RECEIVED  AND  SHIPPED 

By  Charles  E.  Cake 

fTlHE  traffic  department  not  only  has  charge  of  the 
•*.  delivery  of  any  product  to  customers,  but  it  also 
concerns  itself  with  in-freight  shipments  coming  to  the 
production  division  of  the  business.  Various  causes  have 
contributed  to  the  present  importance  of  the  traffic  de- 
partment in  business  enterprises,  the  most  prominent  of 
which  are:  first,  the  interstate  commerce  legislation, 
which  places  upon  all  merchants  and  manufacturers  the 
burden  of  ascertaining  for  themselves  the  proper  rates 
for  transporting  freight;  second,  the  tendency  of  all 
business  to  extend  the  limits  of  their  selling  fields,  and 
the  consequent  need  of  equalizing  the  difference  in 
freight  charges  between  these  and  more  favorably  sit- 
uated shipping  centers. 

It  is  the  function  of  the  traffic  man  to  look  after 
the  routing  of  freight  when  routing  is  necessary  to 
insure  a  low  rate.  He  defines  the  manner  in  which  goods 
shall  be  packed,  and  frequently  upon  this  is  determined 
the  rate  which  shall  be  applied.  It  is  his  business  to  see 
that  shipments  are  promptly  delivered  and  to  trace 
them  when  they  are  delayed ;  to  check  the  freight  expense 
and  to  handle  claims  effectively  at  low  costs.  Many  of 
the  claims  which  are  presented  are  sidetracked  and  lost. 
The  man  who  does  not  adopt  a  system  in  the  handling 


TRAFFIC    RECORDS 185 

of  his  claims  and  other  details  which  belong  to  the  traf- 
fic department  is  sure  to  lose  money.  Shipments  which 
have  been  lost  or  miscarried,  unless  traced  and  returned 
to  the  shipper  or  delivered  to  the  consignee  will  be  sold 
at  some  point  for  charge. 

ORGANIZATION  of  the  traffic  department  on  cor- 
rect lines  requires  record-keeping   on   every   item 
received  and  sent,  with  the  giving  and  taking  of  receipts. 

The  information  which  the  traffic  manager  must  put 
on  record  includes  the  freight  classification  of  his  line 
of  goods  to  different  territories ;  the  rates  from  his  own 
and  competitive  shipping  points  to  destination;  the 
switching  rates;  the  routing  of  shipments;  the  tracing* 
of  shipments;  the  filing  of  claims;  the  record  of  claims;, 
the  record  of  freight  charges;  the  payment  of  freight 
charges,  and  the  filing  of  tariffs. 

The  organization  has  two  parts:  the  in-freight, 
division  and  the  out-freight  division.  The  system  of 
the  department  must  be  thorough,  covering  every  detail ; 
if  it  is  not,  the  organization  fails  in  its  duty  as  guardian. 

The  traffic  department's  connection  with  in-freight 
begins  the  moment  the  purchasing  department  places- 
an  order,  when  notice  is  sent  telling  the  name  of  the 
house  from  which  goods  have  been  purchased  and  date 
expected. 

If  the  goods  fail  to  arrive  promptly,  an  "overdue"" 
freight  notice  is  sent  to  the  railroad  by  the  traffic  de- 
partment. If  the  shipment  is  not  forthcoming,  the 
claim  department  goes  through  the  same  procedure  as- 
in  case  of  an  out-freight  loss,  which  is  described  later. 

When  the  freight  arrives,  the  railroad  mails  the  usual 
" freight  notice"  direct  to  the  traffic  department.  This 
is  the  first  information  the  house  has  that  its  expected 


186 


OFFICE    WORK 


freight  has  arrived.  The  traffic  department  enters  this 
notice  in  its  record  of  freight  notices  and  expense  bills. 
After  the  notice  has  been  copied,  an  order  blank  (Form 


WORKOFTHE 

TRAFFK: 
DEPARTMENT 


IN-FREIGHT  < 


{NOTIFICATION  Of  PURC 
DIRECTIONS  6CNT  TO  S 
FOLL.OWING-UP  OP  BHI 


CHASE 

DIRECTIONS  6CNT  TO  SNIPPER 
IPMCNT 


NOTICE  FROM  PURCHASING  AQSCJT 
NOTICE  FROM  RAILROAD. 
OELIVERV 

RECORDING 


NANOLINO  CLAIMS 


ISEE  6ELOW> 


OUT-FREIGHT* 


FICATION  OF  SHIPMENT  TO  8C  MADE 

DECISION  A3  TO  ROUTE 


TAK.NQ 
RECEIPTS 


HANDUNO 
CLAIMS 


{NOTIFI 
DECISI 

{ 


'«<>*  RAILROAD 


pRO|J  OU$TOMW| 


|     CLAIM  RECORD  FOR  FILE* 
I     DUPLICATE  FOR  RAILROAD 
]     CHECKING  WITH  sroCM 
^   FOLLOW- V*. 


FIGURE  XX:     The  traffic  department  is  an  important  part  of  the  office 

and  the  proper  routine  of  its  work,  illustrated  in  this  chart,  is  essential  to 

the  prompt  delivery  and  the  satisfactory  receiving  of  goods 

I)  is  filled  out,  serving  primarily  as  a  notice  to  the  rail- 
road company  that  the  house  desires  freight  as  per 
notice.  The  teamster  presents  this  at  the  proper  door  of 


TRAFFIC    RECORDS 


187 


. 

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188  OFFICE    WORK 


the  freight  house,  where  he  receives  the  goods  called  for. 

Good  management  requires  that  the  teamster  never 
go  to  the  freight  house  with  an  empty  wagon.  When  he 
is  to  bring  goods  for  any  department,  the  traffic  depart- 
ment inquires  of  that  department  whether  it  has  any  out- 
shipment;  the  manager  of  that  department  looks  over 
his  out-shipments  and  delivers  to  the  teamster  any  goods 
he  may  have  to  ship.  The  traffic  department  "back 
freights,"  in  other  words,  reducing  the  delivery  expense 
about  one-half. 

The  teamster,  having  picked  up  the  articles  enumer- 
ated in  the  freight  notice,  takes  from  the  railroad  com- 
pany the  "expense  bill,"  which  is  in  every  part  a  du- 
plicate of  the  freight  notice,  and  reports  back  to  his 
house  and  delivers  th^  goods  to  the  department  for 
which  the  articles  are  intended. 

The  manager  of  this  department  then  checks  on  the 
expense  bill  the  goods  intended  for  him.  The  other 
departments  for  which  there  may  be  articles  in  the  ship- 
ment do  likewise,  until  the  full  list  has  been  checked. 
Then  the  teamster  reports  the  expense  bill  back  to  the 
traffic  department.  Upon  comparison  with  the  freight 
notice  the  traffic  department  knows  that  the  shipment 
has  been  received  in  its  entirety!  If  there  is  a  shortage 
or  breakage,  the  traffic  department  proceeds  under  the 
rules  for  "claims  and  damages." 

As  in-freight  is  received  and  checked  in  the  store- 
room it  is  entered  on  a  freight  record  (Form  II)  in  the 
traffic  department.  This  shows  every  bill  of  goods  for 
which  there  must  appear  in  the  "freight  notices"  file  a 
corresponding  account.  The  two  must  be  alike  in  the 
number  of  articles,  the  weight,  the  freight  and  the  team. 
The  keeping  of  the  original  freight  notice  further  serves 
as  a  check  on  the  railroad. 


TRAFFIC    RECORDS 189 

The  standard  form  of  bill  of  lading  in  use  by  the 
railroads  throughout  the  United  States  is  one  approved 
by  the  Interstate  Commerce  Commission.  There  are  two- 
forms.  One  is  known  as  the  straight  bill  of  lading  and 
is  not  negotiable.  The  other  is  an  order  bill  of  lading 
and  is  negotiable.  Both  forms  consist  of  three  parts, 
which  are,  in  fact,  shipping  receipts.  The  sheets  dif- 
fer only  in  name  and  signature.  The  top  sheet,  known 
as  the  original  copy,  is  kept  by  the  shipper  as  a  receipt 
from  the  railroad.  It  is  signed  by  the  shipper  and  the 
agent  for  the  railroad.  The  second  sheet  is  the  ship- 
ping order,  and  is  signed  only  by  the  shipper  and  is 
held  by  the  railroad  as  its  receipt.  The  third  sheet  is- 
a  memorandum,  signed  by  the  shipper  and  agent,  and 
intended  to  be  sent  to  the  customer,  or  kept  by  the  shipper. 

Standard  bills  of  lading  may  vary  in  size,  and  may 
contain  printing  matter  in  addition  to  that  prescribed 
by  the  Interstate  Commerce  Commission,  but  there  must 
not  be  any  conflict  of  statement. 

All  railroads  provide  forms  of  the  approved  bill  of 
lading  for  the  use  of  their  shippers.  Instead  of  using- 
these,  however,  many  shippers  print  their  own  bills  in 
standard  form  in  a  size  that  conforms  to  their  perma- 
nent office  records  and  suitable  for  filing. 

Original  receipts  are  filed  undeif  date,  each1  month 
kept  separately;  and  if  a  receipt  is  taken  from  the  files. 
for  any  purpose,  an  exact  copy  is  put  in  its  place, 
marked  "  duplicate. "  When  a  shipper  retains  the 
memorandum,  it  is  filed  with  the  original,  and  serves, 
as  a  "duplicate."  A  purchaser  receiving  the  memo- 
randum sheet  in  addition  to  the  usual  invoice,  can  save 
the  work  of  preparing  a  teamster's  list  of  the  articles- 
shipped  by  attaching  the  sheet  to  the  delivery  order 
given  him  when  he  is  sent  to  the  freight  house. 


190 


OFFICE    WORK 


The  record  for  all  freight  paid  is  arranged  so  that  each 
road's  freight  is  kept  separately.  This  puts  the  house 
in  a  position  to  know  what  business  each  road  gets  and 
what  service  it  gives;  also  furnishing  the  simplest 
plan  for  locating  the  amount  of  freight  paid  on  a  par- 
ticular shipment.  Again,  the  original  freight  notice,  the 
record  of  freight  received  and  the  record  of  freight  paid 
must  conform. 


R.     R.  CO. 

YOUR  NO,  

on.  TO    KELLY,  MAUS  &  CO.    INC. 

CHICAGO 

«• 

ON  SHIPMENT 

WGT.                                                 1AMT. 

AMT.'OF 

AMT. 

DATE 

FROM 

TO 

WHEN  PAID  CREDIT 

BILL  LADING  DATED 

CONSIGNOR 

CONSIGNEE 

SUNDRY   LOSSES 

PACK.  NO                          W.C.  NO. 

DATE 

CAR  NO. 

* 

COVERED  BY 

EXPENSE  BILL  NO. 

DATE 

PAPERS  TO 

REMARKS 

KELLY,  MAUS  A  CO. 

BV 

FORM  HI:  A  claim  record  is  filled  out  when  a  shortage  in  freight  occurs. 
It  is  filed  with  the  railroad  company  instead  of  the  original  freight  receipt 

The  traffic  department  pays  freight  bills  weekly.  The 
expense  bill  has  been  found  correct  from  checking  with 
the  freight  notice.  The  traffic  department  has  then  only 
to  make  out  its  "cashier's  voucher"  and  the  amount  is 
forwarded  to  the  railroad  company. 


TRAFFIC    RECORDS 191 

The  connection  of  the  traffic  department  with  out- 
freight  shipments  from  the  house  to  its  customers  comes 
after  the  sales  order  has  gone  through  all  the  other 
departments;  after  it  has  been  recorded  by  the  entry 
clerk,  and  approved  by  the  price  man  and  credit  man- 
ager. 

Thus  approved,  the  order  comes  to  the  traffic  depart- 
ment. The  shipping  clerk  of  this  department  imme- 
diately routes  and  checks  the  order.  It  is  then  sent  to 
the  department  having  the  articles  called  for,  a  separate 
order  for  the  shipping  clerk  accompanying  it. 

Many  shippers  make  a  practice  of  printing  on!  the 
three  sheets  of  the  bill  of  lading  a  complete  list  of  all 
the  articles  freighted  at  any  time  by  the  shipper.  The 
number  of  articles  (or  boxes  or  packages)  may  then 
be  indicated  quickly  in  a  blank  column  at  the  edge  of 
the  list.  As  many  as  a  thousand  items  are  often  printed 
in  columns.  Accuracy  requires  that  a  wide  space  be 
left  between  the  items  to  prevent  a  figure  appearing 
in  front  of  the  wrong  item  on  the  shipping  order  and 
the  memorandum.  This  frequently  happens  when  the 
items  are  printed  in  small  type  and  the  carbon  paper 
and  sheets  slip.  If  large  type  is  used,  it  is  necessary  to 
decrease  the  number  of  items  or  the  sheets  will  be  too 
large  for  convenient  handling. 

1/iOLLOW-UP  to  secure  action  on  claims  for  goods 
A  lost  en  route  or  damaged  is  an  important  duty  of 
the  traffic  department — correct  routine  to  follow. 

If  the  house  is  unable  to  fill  the  order  entirely,  goods 
out  of  stock  are  reported  to  the  traffic  department.  The 
items  are  entered  on  a  separate  slip  and  the  customer 
notified. 

If  this  shipment  is  lost,  a  claim  is  entered  against  the 


192  OFFICE    WORK 


railway  in  an  accurate  and  unanswerable  way. 

Instead  of  filing  an  original  freight  receipt  bill  with 
the  railroad  company,  a  "claim  record"  (Form  III) 
is  filled  out,  the  original  of  which  is  kept  for  the  house 
files,  and  a  carbon  sent  to  the  railroad  company.  The 
claim  is  made  out  from  the  original  of  the  bill  of  lading, 
and  in  accord  with  the  conditions  printed  on  the  back  of 
the  bill.  The  chances  of  the  claim  being  adjusted  on 
any  except  a  satisfactory  basis  are  small,  as  no  claim 
of  shortage  will  hold  against  the  original  receipt  in 
possession  of  the  company,  and  which  has  been  signed 
by  the  agent  for  the  railroad. 

In  tracing  shipments  the  receipt  is  never  surrendered 
to  the  railroad  company.  The  railroad  agent  is  sent  a 
statement  of  the  shipment  as  shown  by  the  bill  of 
lading.  In  case  of  loss  or  damage  the  receipt  is  at- 
tached to  claim  papers.  It  often  becomes  advisable  for 
the  house  to  institute  a  tracing  itself  and  not  leave 
the  matter  entirely  to  the.  railroad.  This  is  done  to 
expedite  the  tracing,  and  show  the  customer  that  the 
house  has  an  interest  in  his  welfare.  No  forms  are  used 
for  this  separate  tracing.  If  the  shipment  was  made 
from  Chicago  to  some  point  in  Ohio  by  the  way  of  Cin- 
cinnati, a  letter  is  written  to  the  company  in  Chicago, 
the  connecting  line  in  Cincinnati,  and  the  agent  at  the 
destination. 


TN  THE  game  of  business  as  in  the  game  on  the  diamond, 
it  is  the  man  who  keeps  score  on  results  who  follows  most 
closely  the  progress  and  the  profits  of  his  work. 

—John  T.  Wolff 

L.  Wolff  Manufacturing  Company 


XX 

OFFICE  SHORT  CUTS  AND 
ECONOMIES 

By  Wesley  A.  Stanger 
Formerly  Sales  Manager,  Royal  Typewriter  Company,  Chicago  Branch 

JUST  because  the  loss  in  an  individual  instance  is 
small,  most  managers  let  little  items  of  office  waste 
go  unchecked.  They  forget  that  a  one-tenth  of  a  cent 
leak  contributed  to  three  times  a  day  by  one  hundred 
employees,  means  a  loss  at  the  end  of  the  year  of  one 
hundred  dollars.  Any  business  man  would  drop  his 
work  and  institute  a  rapid  search  if  you  told  him  that 
a  hundred-dollar  bill  had  been  dropped  out  of  his  cash 
drawer  into  the  sweepings.  But  just  because  this  hun- 
dred dollars  is  dropping  out  in  driblets  of  one-tenth  of 
a  cent  he  lets  it  pass,  even  though  the  stopping  of  the 
leak  is  easy. 

A  cashier  in  a  firm  that  maintained  a  number  of  dif- 
ferent departments  made  a  practice  of  entering  the 
amounts  coming  from  each  department  in  a  separate  and 
distinct  column  in  his  cashbook.  There  were  twenty 
of  these  columns;  each  column  represented  a  depart- 
ment. They  occupied  four  pages  a  day.  He  was,  there- 
fore, obliged  to  add  up  each  column  and  carry  the  total 
over  on  the  next  page,  which  meant  eighty  operations. 

An  expedient  for  eliminating  these  eighty  operations 
was  suggested  to  him,  which  by  its  very  simplicity  had 
not  before  occurred  to  him.  The  plan  was  to  cut  oS 
an  inch  alternately  from  the  top  and  from  the  bottom 


194  OFFICE    WORK 


of  each  page,  thus  leaving  the  total  always  in  sight 
when  a  page  was  turned.  The  time  saved  by  this  scheme, 
while  considerable  in  itself,  was  dwarfed  in  importance 
when  the  errors  avoided  by  the  abolition  of  transcribing 
were  considered. 

How  many  dollars'  worth  of  pins  did  you  buy  for 
your  office  last  year? 

You  don't  know.  Neither  did  'Jackson,  the  head  of  a 
business  with  an  office  force  of  a  couple  of  hundred 
people. 

But  one  day  he  came  quietly  round  a  corner  of  the 
office  and  found  two  messenger  boys  pelting  each  other 
with  pins  bought  with  his  money.  Then  he  investi- 
gated. 

He  found  that  he  was  buying  pins  in  quarter  pound 
boxes.  When  a  requisition  went  down  from  any  one 
of  his  several  hundred  employees  to  the  stationer  it  was 
for  "one  box  of  pins,"  and  that  is  the  way  the  order 
was  filled.  Every  desk  had  a  box  of  pins  on  or  near  it 
and  they  were  usually  scattered  everywhere.  The  actual 
amount  of  money  spent  for  pins  ran  into  many  dollars 
at  the  end  of  the  year.  If  cost  could  be  reduced  here 
it  was  quite  as  important  as  figuring  out  how  sheet 
metal  could  be  cut  to  make  twenty-one  burrs  instead 
of  nineteen. 

This  analytical  business  man  found  that  the  waste  oc- 
curred as  the  result  of  too  great  an  abundance  of  pins. 
The  solution  was  to  reduce  the  number  issued  at  each 
call  and  to  urge  economy  in  using  them. 

Why  not  have  a  private  brand  of  pins  ?  It  would  call 
pins  to  the  employees'  attention.  It  would  make  an  ex- 
cuse for  preaching  economy.  It  would  impress  the  firm 
on  their  minds. 

"How  much  will  1,000  small  boxes  like  this  cost  with 


SHORT    CUTS    AND    ECONOMIES  195 

our  label  on  the  top?"  he  asked  his  buyer. 

The  box  was  a  small  slide  affair  similar  to  what  is 
generally  used  for  paper  clips.  In  quantities  it  would 
cost  considerably  under  a  cent,  label  and  all.  So  the 
following  instructions  were  given. 

"Hereafter  buy  pins  in  100-pound  lots,  in  bulk.  If 
you  use  several  sizes,  cut  it  down  to  one  average  size. 
In  this  way  you  are  sure  to  save  in  the  buying.  Have 
1,000  of  these  boxes  made  up  and  have  this  label  pasted 
on  each  of  them — 


VERIBEST    PINS 

Put  up  especially  for 

WILKINSON  &  COMPANY 

These  pins  are  put  up  especially  for  this  firm 
under  our  private  brand.  Employees  are  urged 
to  keep  them  in  the  box  and  not  scatter  them 
about  desks  or  floor.  This  box  contains  250 
brass  nickeled  pins.  Everything  this  firm  uses 
or  sells  is  the  best  obtainable.  DO  YOUR 
PART  TO  KEEP  IT  SO. 


The  boxes  were  filled  by  weight.  Two  hundred  and 
fifty  pins  were  counted  for  the  first  weighing ;  after  that 
the  office  boys  weighed  them  out  and  filled  the  boxes  at 
odd  moments.  Only  one  box  was  issued  at  a  time ;  the 
requisitioner  always  had  to  bring  the  old  box  with  him; 
and  the  stock  clerk  jotted  down  on  the  back  of  the  box 
the  date  issued — so  that  when  it  came  back  to  be  filled 
he  could  see  how  long  the  previous  250  had  lasted.  The 
pin  expense  of  this  office  was  cut  down  nearly  two- 
thirds. 

One  of  the  largest  wholesale  dry  goods  and  general 


196  OFFICE    WORK 


merchandise  concerns  in  the  country,  using  talking  ma- 
chines for  correspondence  dictation  exclusively,  has 
found  a  subsidiary  saving  in  addition  to  the  recognized 
advantages. 

After  a  test  of  the  machines  the  managers  of  cor- 
respondence found  that  the  average  letter  contained 
100  words  or  thereabout,  and  that  often  only  two  or 
three  letters  were  dictated  on  one  wax  record  which  was 
made  to  accommodate  1,500  words  of  ordinary  dictation. 
This  meant  a  considerable  loss,  for  the  entire  cylinder 
had  to  be  shaved  to  remove  100  words,  trimming  it  down 
as  much  as  in  removing  1,500  words. 

Here  was  an  opportunity.  Buying  records  in  quan- 
tities of  5,000  at  a  time,  he  figured  that  a  loss  of  seven- 
ty-five per  cent  of  wax  ran  into  dollars  in  the  course  of 
a  year.  He  sent  out  orders  to  have  all  records  cut  into 
smaller  sizes,  and  instructed  correspondents  to  use  the 
size  of  cylinder  that  would  accommodate  the  dictation 
they  desired  to  give.  Thus  a  100-word  letter  went  on  a 
record  cut  into  thirds.  If  a  man  was  going  to  dictate 
a  string  of  letters  he  used  full  sized  records.  Before 
long  the  system  was  in  general  use  throughout  the  var- 
ious departments  and  over  $500  was  saved  the  next  year 
in  the  cost  of  wax  records. 

The  manager  of  an  office  force  of  two  hundred  got 
a  practical  idea  from  watching  the  water  boy  who 
kept  a  gang  of  street  railway  laborers  supplied  with 
drink  one  morning  while  his  car  was  temporarily  stalled. 

When  he  reached  his  office  he  gave  instructions  to  the 
switchboard  girl  to  keep  tab  on  the  number  of  times 
employees  resorted  to  the  fountain  for  a  drink.  He 
found  that  the  number  of  trips  was  about  seven  hun- 
dred and  fifty. 

Holding  his  watch  to   determine  the   average   time 


SHORT     CUTS    AND    ECONOMIES  197 

consumed,  he  learned  that  the  average  was  about  three 
minutes  for  each  drink.  Without  figuring  the  time  lost 
in  settling  down  to  work  again,  he  saw  that  thirty-seven 
hours  each  day  were  given  to  this  unproductive  proc- 
ess. 

The  street  railway  water  boy  had  suggested  a  real 
saving. 

When  his  five-dollar  water  boy  started  to  make  the 
rounds  the  next  day,  many  of  the  employees  thought  it 
was  a  pleasant  innovation  to  have  their  drinks  delivered. 
Few  realized  that  the  water  boy  was  saving  almost  the 
-equivalent  of  the  office  manager's  salary  for  his  firm. 

" Write  on  one  side  of  the  paper  only,"  was  formerly 
the  rule  generally  given  out  wherever  letters  were  writ- 
ten. But  with  the  advent  of  the  writing  machine  it 
became  a  general  practice  and  the  legend  was  no  longer 
necessary. 

However,  like  all  rules,  there  are  exceptions  to  it. 
Here  is  one  of  them : 

When  you  make  a  carbon  copy  of  a  letter,  write  on 
one  side  of  the  letter  only,  but  on  both  sides  of  the  sec- 
ond sheet.  This  not  only  saves  paper,  but  also  places 
all  of  the  record  you  want  to  keep  on  one  sheet  of  paper 
where  you  can  get  it  all  together.  Your  files  are  for 
your  private  use,  not  for  outsiders;  and  when  you  go 
to  them  to  find  a  letter  to  John  Douglas,  it  is  exasperat- 
ing to  find  the  first  sheet  of  the  carbon  copy  but  no 
trace  of  the  second. 

Pens,  so  the  stationer  of  one  large  corporation  found 
out,  were  consumed  in  his  offices  at  the  rate  of  ten  boxes 
a  month.  A  box  of  pens  contains  a  gross;  thus,  in  a 
year,  the  office  consumed  almost  a  "great  gross"  of 
pens.  He  also  found  that  it  was  carrying  an  immense 
variety  of  pens.  Every  clerk  was  furnished  with  his  own 


198  OFFICE    WORK 


preferred  style,  and  every  requisition  read  "one  box  of 
so-and-so  pens." 

The  stationer  determined  to  reduce  the  pen  expense. 
He  sent  little  slips  to  each  clerk  asking  for  information 
regarding  the  pens  he  preferred,  the  life  of  a  pen  and 
the  use  to  which  he  put  them.  The  slip  he  used  was  as 
follows : 


PEN    CENSUS 

Please  note  below  your  preference  of  pens,  how 
many  you  use  and  what  your  second  choice  is. 
This  information  is  requested  in  order  to  aid  the 
purchasing  department  in  making  contracts  for 
the  coming  year. 

Style Number    

Fine Medium Coarse 

Pens  on  hand 

Second  choice 

Why  do  you  prefer  first  named  pen  ? 


Please  fill  in  immediately  and  hand  to  mailing 
clerk. 


The  result  of  this  "census"  was  that  a  big  supply  of 
pens  of  all  sorts  was  found  to  be  in  the  possession  of 
employees.  He  found  that  the  majority  of  writers  pre- 
ferred a  certain  pen,  that  the  second  choice  showed  but 
little  deviation  from  this  variety  and  that  "freak"  re- 
quests were  almost  negligible.  Users  also  changed  often, 
and  he  had  bought  gross  after  gross  of  pens  merely  to 
satisfy  a  few  personal  whims  of  the  clerks. 

He  sent  a  boy  through  every  department  with  an 
order  for  all  pens  that  were  not  in  actual  use.  As  a 
result  he  had  a  sufficient  supply  of  "freak"  pens  to 
last  the  rest  of  his  life,  and  at  the  same  time  had  aug- 
mented the  stock  of  goods  regularly  used. 


SHORT    CUTS    AND    ECONOMIES  195 

"With  this  information  concerning  the  pens  used  dur- 
ing the  year,  and  with  the  supply  that  he  had  collected 
and  the  statement  of  the  choice  of  the  users,  he  had  a 
basis  upon  which  to  estimate  his  purchases.  He  ordered 
a  sufficient  quantity  of  the  styles  most  demanded,  and 
none  of  the  freak  varieties.  His  orders  for  pens  were 
thenceforth  cut  down  two-thirds. 

He  then  secured  small  envelopes  similar  to  "pay  en- 
velopes" and  printed  up  a  quantity  of  them  as  follows: 


This  envelope  contains  six  Penman  Number  1 
steel  pens.  These  pens  are  carefully  selected  and 
should  any  of  them  prove  defective,  the  user  is 
requested  to  report  it  to  the  stationer. 


On  other  envelopes  he  printed  blank  lines  in  which 
the  style,  number  and  grades  of  pens  could  be  filled. 
These  were  for  miscellaneous  pens,  which  were  rarely 
called  for. 

At  the  end  of  the  year,  he  still  had  a  large  supply  of 
pens  on  hand  and  had  not  been  called  upon  to  buy  more 
than  35  per  cent  of  the  previous  year's  demands.  Pens 
were  60  cents  a  gross.  He  had  been  spending  $72.00  a 
year.  By  this  system  he  cut  it  down  to  $25.50. 

The  envelopes  and  printing  for  the  pens  most  used 
(1,000  envelopes)  cost  $1.10;  the  500  envelopes  printed 
for  miscellaneous  pens  cost  85-  cents.  The  slips  for  the 
"census"  cost  only  the  time  of  the  office  boy,  for  the 
work  was  done  on  the  office  duplicator.  Thus  he  charged 
$1.95  to  expense  for  inaugurating  the  scheme  and 
saved  $46.70  on  the  first  year's  pen  bill. 

Few  managers  have  given  the  matter  of  rubber  bands 
more  than  a  passing  thought.  In  every  business  house 
they  actually  cut  a  big  figure.  Pounds  and  pounds  of 


200  OFFICE    WORK 


them  are  shot  away  by  office  boys,  other  pounds  are  car- 
ried home,  and  still  more  pounds  find  their  way  to  the 
waste  basket,  while  untold  numbers  of  them  are  used 
unnecessarily  because  clerks  will  put  half  a  dozen  bands 
around  a  package  where  one  is  sufficient.  Within  the 
past  few  years  the  price  of  rubber  has  gone  up  by 
leaps  and  bounds. 

Recently  a  buyer  for  a  firm  using  quantities  of  rub- 
ber bands  sought  to  reduce  the  cost  and  began  by  adopt- 
ing a  scheme  similar  to  the  one  used  by  the  man  who 
saved  money  on  pins.  Small  assortments  were  placed  in 
small  boxes  and  the  bands  were  issued  in  that  manner, 
cutting  down  the  waste  of  them  several  hundred  per 
cent. 

He  also  tried  out  a  gum  tape  machine  for  packages  not 
suited  for  fastening  with  rubber  bands,  and  found  that 
the  original  cost  of  installing  the  machine  equipped  with 
a  mile  or  so  of  tape  equalled  about  two  pounds  of  rub- 
ber bands;  so  the  machine  became  permanent.  Now  the 
firm  uses  gum  tape  machines  for  all  packages  going  out 
of  the  office  and  for  all  papers  to  be  stored  in  the  office. 

Similarly  all  labor  and  equipment  processes  in  the 
modern  office  are  open  to  challenge  and  subject  to  econo- 
my for  the  shrewd  office  manager.  Simple,  standard,  di- 
rect effort  makes  for  more  work,  easily  done  and  at  low 
cost. 


T  TSUALLY  when  a  man  falls  short  of  success,  the  trouble 
^  lies  in  some  specific  direction;  it  may  be  bad  judgment 
in  buying;  it  may  be  poor  selling  methods;  it  may  be  im- 
proper handling  of  people.  Whatever  the  fault,  I  believe 
men  could  educate  themselves  out  of  it,  if  they  really  resolved 
to  do  so  and  went  about  it  intelligently. 

— C.  D.  Peacock 

Of  C.  D.  Peacock 


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